Understanding the Bitcoin Cycle
The Bitcoin cycle refers to the recurring phases of bull markets (rising prices) and bear markets (falling prices). Typically, these cycles align with Bitcoin’s halving events—occurring roughly every four years, where the reward for mining new Bitcoin is halved, reducing supply.
The cycle generally follows these phases:
1. **Accumulation Phase:** Bitcoin prices are relatively low, and savvy investors begin accumulating in anticipation of a future uptrend. Market sentiment is typically neutral or slightly bearish.
2. **Uptrend Phase:** Bitcoin starts gaining momentum, with prices steadily rising. Positive sentiment, increased adoption, and media attention drive the uptrend.
3. **Parabolic Advance:** The price skyrockets, often reaching new all-time highs. Media coverage peaks, and retail investors flood the market, driven by FOMO (fear of missing out).
4. **Blow-off Top:** The rapid increase reaches a peak, followed by a sharp decline as early investors take profits and market enthusiasm wanes.
5. **Correction Phase:** Bitcoin enters a bear market, where prices drop significantly and the market consolidates before the next cycle begins.
