Where Are We in the Crypto Market Cycle?

Bitcoin is coming off one of the worst quarters in history, thanks to its massive selloff that sent the price below $20,000. What happened?  

Since hitting a peak in November 2021, the cryptocurrency market has been on a steady decline, losing nearly $2 trillion over several months, driven by the Federal Reserve raising interest rates.

All the virtual tokens – from the premier currencies to the meme coins – have plummeted in value. Be it Bitcoin (-57 percent) or PancakeSwap (-73 percent), only a handful of cryptocurrencies have avoided the bloodbath in the financial markets. The rest, unfortunately, are deep in the red.

But now that it is clear crypto is in a deep bear market, is the bottom on the horizon, or is there more pain to endure? It was only a matter of time before investors had to pay the piper after exceptional gains since the beginning of the coronavirus pandemic.

Where Are We in the Crypto Market Cycle?

While cryptocurrency is more than a decade old, it has been one of the most cyclical segments of the entire financial market. Investors who have been involved since the beginning have witnessed the booms and the busts. The bear market investors are seeing is just another cycle at this point.

But have the bears devoured enough valuations that it is too full and will pave the way for bulls again?

It depends.  

Market analysts have opinions on where we are in the crypto market cycle.

With the U.S. central bank poised to keep raising the benchmark Fed funds rate until it obtains a stranglehold on inflation, traders are fearful of speculative assets, including cryptocurrency. As bad news continues piling up, whether it is platforms suspending withdrawals or crypto companies trimming their payrolls, many institutional investors and armchair traders are frightened of pulling the trigger on a sizeable position in crypto, even though this is typically when fortunes are made.

Meanwhile, now that the market is pricing in a recession, there is an even less appetite for risk. However, industry experts are determining if the chair of the Securities and Exchange Commission (SEC), Gary Gensler, will pass new regulations that could offer security and protection.

Still, Marcus Sotiriou, an analyst at the UK-based digital asset broker GlobalBlock, purports that “Bitcoin is currently experiencing the largest capital outflow event in history,” with no signs of easing.

At the same time, analysts at Glassnode believe there could be signs that the bleeding may be subsiding as technical signals could be flashing a bottom.  

The case for Bitcoin bottom formation is one grounded in observable dominance of strong-hand investors, historically significant lows in numerous macro oscillators, and a strong confluence with prices hovering in striking distance of several bear-market pricing models,” Glassnode said in a research note. “However, can these HODLers hold the line?”

That said, Madeline Hume, a senior research analyst atMorningstar, argues that there is no community of investors championing strong fundamentals right now.  

Everybody is so worried about what the next domino to fall is,” she said.  

But while $70,000 might have been too high of a price, some suggest that $20,000 may be too low due to the number of transactions executed daily.

Kevin O’Leary, a famous investor and mainstay of “SharkTank,” has refrained from calling a bottom in the broader cryptocurrency industry. O’Leary, who is long in the crypto sector, toldCoinDesk that he is waiting for a “panic event.”

“You don’t get a bottom until you have an event,” he said in June. “You don’t get a bottom until you have an event.”

Ultimately, according to a wide variety of financial experts who have been entrenched in the crypto ecosystem, there are many things investors can do to weather the storm f

·      Take a slice of some of your profits now.

·      Dollar-cost average (DCA) down if you bought near the top.

·      Rebalance your portfolio and ditch the speculative coins.

·      Avoid leveraged trades in this environment.

Whether crypto is close to the bottom or not, investors can employ these tactics to survive any cycle.

Is Now the Time to Buy?

Billionaire Warren Buffett is famous for saying that the best time to buy a stock was yesterday.

Indeed, if you are a long-term investor in cryptocurrency, it does not matter what stage of the cycle is forBitcoin, Ethereum, or Avalanche. If you have done your research and due diligence and maintain enough capital to risk on digital currencies, any time is the best time.

Of course, the selloff that has taken place is a prime opportunity for those engaged in the buy-and-hold principle. At these prices, there are many discounts to be had – and we are not talking about the joke coins that do not provide any utility. With many of the premier coins here to stay, whether Cardano or Litecoin, prices are down by at least 55 percent. So, why not pile in at this point?

Now that you have a better understanding of crypto market cycles, you’re ready to invest. Get started with digital currency quickly and easily on Canada’s most secure exchange platform. In only three steps, you’ll be able to buy and sell crypto. Create your account, add funds, and start investing. It is that easy!

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