📈Short Term Market Cycles📈
While each asset’s market cycle tends to vary in length and volatility, all of them follow a similar pattern to this famous photo, the so called ‘Wall Street Cheat Sheet’ As the photo suggests, the fundamental reason why the price of an asset goes up and down in the short term has to do with human psychology, specifically human emotions like fear and greed
📊Long Term Market Cycles📊
Besides human emotions, there are also macro factors at play which influence the ebb and flow of any given asset market. These tend to have a much larger impact in the long term According to famous hedge fund manager Ray Dalio, the most macro market factor is something called the debt cycle This debt cycle is broken down into two phases: a short-term debt cycle which lasts 5-8 years and ends in a recession, and a long-term debt cycle which lasts 75-100 years and ends in a depression
💱Cryptocurrency Market Cycles💱
As most of you will know by now, the cryptocurrency market follows a 4-year cycle that seems to be caused by the Bitcoin halving which, surprise, occurs every 4 years The halving reduces the amount of newly mined BTC by 50%, and this reduction in supply coupled with a gradual increase in demand means BTC goes up in price The cryptocurrency market will probably see its bear market around the time that the stock market does The stock market’s price history suggests this will be sometime in mid-2022, and this happens to correspond to what cryptocurrency’s own market cycle is signaling
🐻Regular Bear Market Scenario🐻
If you’re looking to ride the wave, the first thing you need to understand is that it is extremely unlikely that you will buy the absolute bottom of the next bear market While the exact length of the cryptocurrency bear market is uncertain, historically it’s lasted about a year before seeing a trend reversal. This is the best point if you aren’t dollar cost averaging
🎈Hyperinflation ‘Bear Market’ Scenario🎈
In a hyperinflation ‘bear market’, the price of cryptocurrencies will probably go through the roof, but their purchasing power will decrease If we enter some sort of bear market hyperinflationary period, the last thing you’ll want to do is buy or sell your cryptocurrencies based on their fiat value Instead, you’ll have to do your best to estimate how much value your cryptocurrencies have relative to other assets that you actually need or want and buy and sell your crypto based on that information
😢Depression Bear Market Scenario😢
If the next cryptocurrency bear market ends up being part of a global depression, it will make for an amazing dollar cost averaging opportunity, assuming you have the funds to spare of course Although the crypto market hasn’t gone through a depression before, history suggests that it won’t hold up too well, and the price could continue to drop for years.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.