In this post, we’re keeping it simple. You’ll learn the most important fundamentals that you need to know to become a seasoned vet in understanding Bitcoin and crypto market cycles. And we’ll do it in bullet proof form.
- Bear markets in Bitcoin and digital assets are much worse than the traditional definition of a bear market in stocks (20% or more); historically, crypto bear market corrections have been around 80-85% in Bitcoin and 95-99% in alt coins.
- Bull markets in Bitcoin always involve a series of 20-35% corrections. So be prepared during the next wild run. It’s a bumpy ride.
- The digital asset market follows Bitcoin; if Bitcoin is in a bull market, all digital assets are in a bull market. If Bitcoin is in a bear market, all digital assets are in a bear market.
- In a bull market, alt coins typically outperform Bitcoin.
- In a bear market, alt coins typically have deeper corrections than Bitcoin.
- Bitcoin has completed three distinct market cycles and we’re currently in the process of completing number four.
- Cycle #1: 102,000% increase; 93% correction.
- Cycle #2: 55,000% increase; 84% correction.
- Cycle #3: 10,000% increase; 83% correction.
- Cycle #4: 2,090% increase; 74% correction so far with the $17,600 price level. More typical 80% correction would drop Bitcoin to $13,800.
- In a bull market, new narratives and new niches drive alt coin valuations to unsustainably high levels. You can certainly take advantage and trade these. Be sure to take profits and remember TAXES!
Ok, those are the key fundamentals. I’d recommend going over that list a few times until you’re a true pro. I go over this and much more in explaining crypto market fundamentals in my book, The Modern Investor, which is now up on Amazon.
Thanks for reading! If you enjoyed this, check out the other articles and don’t forget to follow me on Twitter @andrewdfarrar for up-to-date crypto content. In these crazy times, it’s never been a more important time to learn about this new asset class.