The crypto market moves in clear cycles: exciting peaks followed by painful downturns. Yet, even after recognizing this pattern, many investors repeat mistakes that lead to heavy losses. Let’s analyze the causes and how to turn these cycles into effective investment opportunities.
1. Decoding the 4-Year Cycle of Crypto 📅
Crypto has a certain 'rhythm' – a 4-year cycle that repeats through each phase. This is the common pattern of past cycles:
Cycle 2015-2019: Bear phase lasting 180 weeks, bull phase lasting 32 weeks.
Cycle 2019-2023: Bear phase lasting 160 weeks, bull phase lasting 45 weeks.
Cycle 2023-2027: Currently in a bear phase, with expectations for a strong upward movement soon.
However, despite recognizing the cycle, many investors still easily get trapped. The reason lies not just in timing the market but in timing their emotions.
2. The Biggest Challenge: Psychology When Investing in Crypto 🎢
Investing in crypto is not just about reading charts but also about managing emotions through each market phase:
Red Phase: Prices start to decline from the peak (ATH), investors still hope this is just a minor correction. But as prices continue to fall, anxiety takes over, leading to panic selling at the worst moment.
Golden Phase: Prices start to stabilize, but due to previous losses, investors become hesitant. Even with signs of recovery, they still fear a further decline and miss important entry points.
Green Phase: Prices rise, excitement builds, and FOMO (fear of missing out) kicks in. But without a plan, many jump in too late and are unprepared for a market reversal.
3. Escape the Emotional Trap: Common Mistakes 🤯
The biggest weakness isn’t the market cycle but how we react to it. Emotions lead to mistimed trades:
Red Phase Mistake: Holding on too long, then panic selling when prices hit bottom.
Golden Phase Mistake: Sitting out of the market due to feelings of regret over the past, missing important buying opportunities.
Green Phase Mistake: Getting caught up in the excitement, joining too late, and being unprepared for the next decline.
Successful Planning in Crypto: It’s All About Strategy 📈
To truly profit from crypto, you need not only to understand the market cycle but also to have emotional discipline. Start with the following principles:
Establish Clear Entry and Exit Points: Stick to the plan regardless of minor market fluctuations.
Risk Management: Proper allocation and avoiding excessive emotional investing.
Maintain a Stable Mindset: Don’t let rallies make you greedy or downturns panic you.
With a solid and thoughtful strategy, you can avoid common traps and position yourself for long-term opportunities. Don’t let the market dictate your emotions; enter each phase with a strategy that keeps you focused and ready to seize opportunities as they arise.