Main points
- 4-Year Cycle — Bitcoin halving creates ~4 year cycles with predictable phases
- 4 Phases — Accumulation → Markup → Distribution → Markdown
- Buy in Despair — Best buys are when "crypto is dead" headlines dominate
- Sell in Euphoria — When everyone is bullish, smart money exits
- Altcoin Rotation — BTC first, then ETH, then large alts, then small caps
- Cycles Rhyme — History doesn't repeat exactly, but patterns echo
What is a Market Cycle?
A market cycle is the natural rhythm of price moving through phases of accumulation, markup, distribution, and markdown. Every market has cycles — stocks, real estate, commodities — but crypto cycles are especially pronounced.
Why? Because crypto is driven almost entirely by human psychology. Fear, greed, hope, and despair create dramatic swings that repeat with surprising regularity.
"Markets are never wrong. Opinions often are. The market is a pendulum that forever swings between unsustainable optimism and unjustified pessimism."
— Benjamin Graham
Contrarian Take
Everyone's worried about Meta's metaverse spending. They should be. But what they miss is that Meta's AI advertising engine is so far ahead, they can burn $10B yearly on moonshots and still dominate.
The 4 Phases of Every Cycle
Phase 1: Accumulation
Market bottomed. Smart money (whales, institutions) quietly buy. Sentiment: "Crypto is dead." Media ignores or mocks crypto. This is when fortunes are made.
Phase 2: Markup (Bull Market)
Prices rise. Early buyers in profit. FOMO kicks in. Media covers "Bitcoin's comeback." New investors enter. Momentum builds on momentum.
Phase 3: Distribution
Smart money sells to retail. Extreme euphoria. "This time is different." Everyone's an expert. Price volatility increases. Warning signs ignored.
Phase 4: Markdown (Bear Market)
Prices crash 70-90%. Denial, then panic. "I'll sell when it recovers" → capitulation. Projects die. Retail exits at bottom. Cycle resets.
Bitcoin's 4-Year Halving Cycle
Bitcoin's halving (block reward cut in half every ~4 years) creates the rhythm of crypto cycles. Less new supply → supply shock → price appreciation → euphoria → crash → repeat.
Pattern: Peak typically 12-18 months after halving. Bottom typically 12-18 months after peak. Accumulation period follows.
Historical Cycle Analysis
Reading Market Sentiment
Capitulation
Depression
Skepticism
Optimism
Thrill
Delusion
Signs You're at the Bottom (Buy Zone)
- "Crypto is dead" headlines everywhere
- Friends who bought at the top have stopped talking about it
- Crypto subreddits are quiet, low engagement
- Project teams laying off, shutting down
- VCs saying they're "taking a break from crypto"
- Your mom isn't asking about Bitcoin anymore
Signs You're at the Top (Sell Zone)
- Celebrities shilling coins (Matt Damon, Tom Brady era)
- Mainstream media daily coverage
- Your Uber driver has a "hot tip"
- New coins with no utility pumping 100x
- "This time is different" / "Supercycle" narratives
- Everyone predicting $500K BTC by year end
The Altcoin Rotation
Money flows through crypto in a predictable pattern. Understanding this rotation helps you catch waves at the right time:
When memecoins are going parabolic and everyone is aping into dog coins, the cycle top is usually imminent. This is when smart money exits to Bitcoin or stablecoins.
Watch Bitcoin Dominance
BTC.D rising = Money flowing to safety (early bull or late bear). BTC.D falling = Altcoin season (late bull). Track this at TradingView.
How to Position for Each Phase
Accumulation Phase
- DCA into BTC and ETH heavily
- Build positions in high-conviction alts
- Ignore the "crypto is dead" noise
- Maximize earning (work, side hustles)
- This is wealth-building season
Markup Phase
- Hold your positions, let them run
- Rotate some BTC profits to alts
- Set trailing stop losses
- Take some profits (10-20%)
- Don't get overexposed to leverage
Distribution Phase
- Start scaling out systematically
- Rotate alts back to BTC/stables
- Tighten stop losses significantly
- Take 50-75% of profits off table
- Ignore "supercycle" narratives
Markdown Phase
- Stay mostly in stablecoins
- Small DCA into BTC only
- Avoid catching falling knives
- Wait for capitulation volume
- Prepare capital for next cycle
Cycle Awareness Checklist
Use this checklist to gauge where we will likely be in the current cycle:
- Check the halving date — How long since last halving? Historical peaks 12-18 months after
- Price from ATH — Down 70%+ = likely accumulation. Near ATH = late stage
- Sentiment analysis — Read crypto Twitter. Euphoria or despair?
- Google Trends — "Bitcoin" search volume high = late bull. Low = accumulation
- Funding rates — Extremely positive = overleveraged long = risky
- BTC dominance — Rising = safety seeking. Falling = altcoin rotation
- Mainstream coverage — Daily news = late. No coverage = early
"Be fearful when others are greedy, and greedy when others are fearful. In crypto, this wisdom is worth fortunes if you can actually execute it."
— Warren Buffett (adapted for crypto)
Cycles are not guarantees — they're patterns. But those who understand them have a massive edge over those who don't.