Why Do People Keep Losing Money in Crypto, Even with the 4-Year Cycle?
The crypto world runs on a four-year rhythm: three years of bear markets, one powerful year of bull runs. Despite knowing this cycle, many investors still stumble, caught off guard by the rollercoaster of emotions that drive each phase. Letās break down why, and how to stay ahead with the right mindset.
Understanding the Crypto Cycle
Cryptoās four-year pattern has been surprisingly steady but incredibly intense. Hereās a look at this cycleās flow:
1. Bear Market: Typically three years long, with price drops and market consolidation.
2014-2018: 177 weeks of bear market followed by a 34-week bull rally.
2018-2022: 157 weeks of bear trend, ending with a 47-week bull run.
2022-2026: Weāre in the bear phase now, waiting for the next peak.
Despite this cycle's regularity, timing trades perfectly is challenging. Market psychology plays a huge role here.
The Psychology Behind the Phases
Each phase has its own emotional tone, impacting investor behavior and leading to decisions driven by fear, greed, or denial.
1. Red Phase (All-Time High): At market peaks, euphoria morphs into denial as prices start to dip. Anxiety and panic follow, leading many to sell at a lossāclassic ācapitulation.ā
2. Yellow Phase (Accumulation): As prices stabilize, panic becomes frustration and even apathy. This phase often feels depressing, but itās a prime time for experienced investors to accumulate assets, setting the stage for the next rally.
3. Green Phase (Bull Run Begins): Optimism builds, euphoria kicks in, and all-time highs make headlines. New investors flood in, often buying at the top, thinking the gains will never stop.
The Real Edge ā Mastering Emotions
Knowledge of the four-year cycle is a strong tool, but the real edge comes from controlling emotions. Late buying due to FOMO, panic-selling during dips, and clinging to falling assets can lead to avoidable losses. Success comes from timing entries and exits based on strategyānot emotion.
Key Takeaway: Control Your Mind, Control the Market
The true winning formula is emotional discipline. By staying calm and sticking to a well-thought-out plan, investors can navigate the crypto cycle with a steady hand, reducing risk and enhancing long-term gains.
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