Market cycle phases
Phase 1: the parabolic growth
When the price is at the bottom after a bearish market, investors start to buy a lot of BTC because there is tons of liquidity available. After that, altcoin holders start to notice that BTC rises, so they sell their positions to buy Bitcoin.BTC price surges
Phase overlap Money flows into ethereum but it struggles to keep up with btc
Eth begins to outperform btc
Phase 2: Altcoin’s cycle begins Ethereum phase
After the first boom of BTC price, most altcoins get cheaper and some people that seek adventure start to buy them, but just a few coins outperform BTC. Eth outperforms btc and we hear talk of eth flipping btc in market cap.
Phase overlap Money trickles into large cap alts with large buy ups happening
Phase 3: Hype still going.....Large Caps
When it looks as though Bitcoin is going to the moon, investors who were left behind want to ride the wave, so they start to buy tokens that haven’t explode yet regardless of the project. The majority of tokens begin to rise.Eth still outperforming btc and large caps go parabolic
Phase overlap Regardless of marketcap altcoins with strong fundamentals are having pumps
Phase 4: Time to harvest Alt season and the end.Large caps have gone full vertical and we see blow off tops
Mid caps ,low caps and micro caps all tend to pump together.
Large caps outperform btc and eth
It seems every coin is going parabolic
Memes are everywhere everyone is super excited and mania is in the air AND THEN
Everybody starts to sell every coin in their possession and the price falls to a bottom, following a bear market until phase 1 comes again.
Altcoin Cycle
So how do you know when to move your money from Bitcoin to Altcoins?
The easiest way to determine if we’re going to the moon with altcoins is by comparing the performance of the top 50 Altcoins on the market and comparing them to Bitcoin. For instance, last month Bitcoin was beaten by 40 of the top 50 Altcoins, so the indicator is as follows:
Indicator = No. Altcoins outperformed BTC / No. Altcoins compared = 40/50 = 0.8
In other words, Bitcoin was beaten by 80% of the top 50 Altcoins last month, so it was an Altcoin month. This indicator goes from 0 to 1, so an Altcoin cycle begins when the value of the indicator reaches 0.5, and a Bitcoin cycle occurs below 0.5. A strong Altcoin cycle is above 0.75, and a strong Bitcoin cycle is below 0.25. You can repeat the calculation across different timeframes (a day, a week, a season (90 days), a year, etc) to gain different perspectives on the market.
Closing thoughts
The Bitcoin and Altcoin market cycles allow you to determine whether it is better to buy or sell cryptocurrency and is essential for making decisions about how to allocate your portfolio. In other words, it’s definitely worth spending the time to learn more about market cycles.
By Juan Del Carmen
April 16, 2021
Author: George Georgiev Last Updated Jan 25, 2021 @ 12:34