Crypto Wealth Nation
CRYPTO INSIGHTS
Learning from the past...
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BITCOIN 4 YEAR CYCLES
The cryptocurrency market is largely influenced by what Bitcoin does. As ocean tides are linked to the movements of the moon, the crypto market is linked with Bitcoin’s movements, most of the time. When Bitcoin rises, the crypto market rises and when it falls, the crypto market follows. This is because for most of the time, Bitcoin represent 50% or more of the entire crypto market space. During ALT Coin seasons, when alternative coins are increasing in value more than Bitcoin does, this market ratio can fall to below 50%.
The 4-year cycle is the result of several factors. One is halving, where every 4 years, the cost to mine Bitcoin doubles. One interesting insight is that following each “halving”, Bitcoin normally does not drop lower than it closed preceding the previous halving. This fluctuation in value could present a very timely moment to buy this digital asset.
If we consider the start of a 4-year cycle when the market starts trending down from the last high, then we could observe that 4 phases occur:
1st PHASE – BEAR CYCLE: Last high ENDS, bear market (market starts trending down) BEGINS. Duration: Around 1 Year
2nd PHASE – BEAR CYCLE: Consolidation period, price is “Range Bound” (stuck in between 2 prices and bouncing off between the higher and lower levels).
Duration: Around 1 – 4 months. This is cleared in the “4 Year Cycle Chart 2”
3rd PHASE – BULL CYCLE BEFORE THE HALVING: Uptrend begins from lower level to previous cycle high. Duration: Around 1 – 1.5 years
4th PHASE – BULL CYCLE AFTER THE HALVING: New uptrend starting from previous cycle high. Duration: Around 9 months to 1 year.
In previous cycles, entering at the end of the bear market and exiting at the top would have generated an average of 110 times your initial investment. For example, for every $1,000 invested, you would have netted $110,000. Some ALT coins would have provided much better returns. An example in this latest cycle is Theta, which I purchased for US$0.7 cents. It reached a high of US$15.45 in the month of April 2021; 220 times my initial investment.
4 YEAR CYCLE CHART #1
4 YEAR CYCLE CHART #2
BITCOIN 4 YEAR HALVING
Halving refers to the number of coins that miners receive for adding new transactions to the blockchain being cut in half. This will now diminish from 12.5 to 6.25 Bitcoin and will halve again every 210,000 blocks, until the last Bitcoin is mined in 2140. Each time in the previous cycles a Bitcoin “HALVING” has started, a new level of highs has been established and the price has never gone back to below the previous amount. In 2013, a Bitcoin was worth around US$15.80. It never went that low again. Same with the 2016 price of US$512. We will likely never see Bitcoin valued below the US$8,179 price, as it was after the third halving of 2020.
PREVIOUS AND CURRENT CYCLE COMPARISON
Think of any market trend as a marathon. Every now and then you must slow down or even stop to drink some water and catch your breath. This is the same with any market trend. These are corrections and consolidation periods. In a bull cycle in Bitcoin (BTC) this happens roughly 5 to 7 times during the last phase (phase 4) of a 4-year cycle. (Read more on this below, including a chart for the last cycle.) This does not, of course, mean that it will happen again, but it provides us with an indication of what could happen. Each correction can last for a few days up to 34 days (based on the last cycle), so be patient.
CORRECTIONS ARE NORMAL
LAST BULL CYCLE CORRECTIONS
#1 IMPORTANT: Each time a correction has occurred, a percentage of people have thought that the market was over and sold their position or even worse, shorted (changed their preference from buying to selling) their digital assets.
#2 IMPORTANT: Corrections are the biggest opportunity to make money! This is because if you are confident that you are still in a bull market, then you are literally buying at a discounted rate. This is called “Buying the Dip” and is one of the most effective strategies to accumulate profits.
BULL – UPTREND YEARLY CYCLE CORRECTIONS
CORRECTIONS AND CONSOLIDATION PERIODS ARE NORMAL.
In the 2017 Uptrend Cycle, Bitcoin experienced five major corrections (see chart below). This does not mean that it will happen precisely this way again, but it provides us with an indication of what may happen.
