The cycle of crypto can be shown as seasons, Spring, Summer, Autumn and Winter. Each season representing one year in the four-year crypto cycle.
The four-year cycle is only approximate in some cases we see it only last 3½ years and other times it lasts well over four years. However, the most recent Winter ended at the end of 2022 meaning we saw a 4½ year cycle (this was probably aided by the FTX collapse), which means we can look to a 3½ year cycle for the next run.
With positive price action from the very start of 2023, we can say that the crypto Spring started at the beginning of the year. Spring is the first bullish year after the bear market Winter. In Spring we normally find positive price action and by the end some clear signs or shoots of the bull run. The Summer follows, this cycle it looks to have started in June 2023 and you often expect the halving to come at the end of summer around April. In our current cycle that will be April 2024. During the Summer we find price action rising slowly but after the halving the bull run picks up pace.
Shortly after the halving, the crypto Autumn kicks in, normally this is the most bullish season in the cycle. This is where we find the parabolic movement that gives crypto it's phenomenal returns. However, what goes up must come down, this is when the Winter kicks in and we see the bearish market in full flight. Price action drops like a stone and often we see 70% or even 80% drops from all-time highs. As long as you don't panic and you do your research, you will understand that the 80% drop is nothing to panic about. You simply hold and be patient, as only after a short crypto winter will you see the value of your cryptocurrency increase.
For your patience you are heavily rewarded through the crypto Summer and Autumn in the following cycle, as notoriously all time highs are several hundreds of percent above the previous all time high from the proceeding cycle.
History of the Cycle.
2014, 2018 and now 2022, every fourth year we have a downturn. Like clockwork. No one could have possibly seen the collapse of TERRA/LUNA and then 6 months later FTX going the same way. But the charts don’t lie. It was clear that even without the crypto disasters, 2022 was going to be a bearish year for the space.
Quick history lesson, Bitcoin was the first digital currency. It basically went from pennies to dollars in value over the first 2 years of its existence between 2009 and 2011. After that it started creeping up to $100 and people started taking note. Then $150, then nearly $200 in October 2013. By November 2013 it had exploded to $1150. 1000% gain in 12 months. The world started noticing but didn’t buy in, so the price dropped. Having enjoyed the ride up to huge gains during 2013 crypto Autumn, we were now experiencing the first major crypto Winter in 2014.
Through the next few years Bitcoin was adopted by more people and the price rose, by the end on 2017 we had thrived under the crypto Summer and Autumn again and BTC had hit a parabolic run sitting at $13,062. Incredible. However, just like the previous cycle, that price seemed too high for the average person to adopt it. So, the price fell, leading to people claiming its over hyped and overpriced.
Through 2018 We had our Winter, we saw a significant drop in BTC ending the year at $3441, 65% down.
By now the early adopters had noticed the cycle, they knew not to sell at a loss but to hold the Bitcoin until the crypto Summer and Autumn. Crypto was here to stay. They were heavily rewarded. BTC kept rising in value over 2019/20 but like all cycles it exploded in the final year, in 2021 prices hit $65k and then $69k across a few months in two separate spikes. Ending in November 2021 sitting at an all-time high.
If we examine the Bitcoin price action in the bearish years and then the following bullish year, we can see a pattern starting to form.
2014 - 73% downturn
2018 - 65% downturn
2022 - 59% downturn
This percentage is decreasing, showing that even in a bear market the strength of Bitcoin is becoming greater. Conversely, the first bullish year after a bear is increasing in percentage.
2015 - 87% rise
2019 - 110% rise
2023 - We could mean the percentage at 98.5%, but I would expect it to be closer to 150%.
This is obviously speculation; however, the numbers are clear, and we can expect a slow a steady rise throughout 2023, especially through the later months.
However, 2024 and 2025 will be when the parabolic gains are made. The Crypto Summer and Autumn will be very bullish.
Missing 2023 won’t be the end of the world. Missing the following two years will be for any trader.
In summary, you can use this knowledge, along with chart analysis and understanding the narrative of crypto, to not make rash decisions, and certainly don't sell any crypto under the pressure or concern that price action is falling. Once you learn to develop the patience and understand what season of the cycle you're in, you'll have peace of mind and still be able to sleep easy.
Disclaimer - None of what is written on this website is financial advice and only descriptions of how the author trades and for entertainment purposes.
Comments