Where we are in the Crypto Cycle
October 2023 https://youtu.be/hdJ-Uhcx9V8
Nature of the Crypto Cycle:
Crypto has operated in cycles that have historically been frighteningly consistent. These cycles have distinct phases: Boring low, boom, peak, and crash.
Historical Context:
In 2019, there was a "boring low" phase. A boom was observed in 2020 and 2021, leading to a peak. This was followed by a crash until June 2022. Since June 2022, the market has been in the "boring low" phase. The entire cycle, from one boring low to the next, usually spans 3 to 5 years.
Predictions and Investment Strategy:
We are currently more than a year into the "boring low" that began in June 2022. It's impossible to predict the exact duration of the current phase, but it's nearing its end. This might mean another year, six months, or even just a month.
Dollar-cost averaging:
Investing a fixed amount consistently, regardless of the price. This helps in averaging out the cost of investment over time. An important insight is to invest during the "boring low" when prices are relatively stable and lower, as opposed to during the boom phase when prices skyrocket.
Volatility and Trends:
Despite the name, the "boring low" in crypto isn't truly boring. Prices can still be volatile up 100% and down 50%, but that is not as wild as during the boom up 1000% or crash down 80%. Towards the end of the boring low, there is often a sharp dip ("whoosh") before transitioning into the next phase.
Common Mistakes:
Some investors attempt to time the market perfectly by studying charts and looking for patterns. "Guys who draw lines on chart" may occasionally profit, they always miss out on longer-term gains. The goal is to add risk assures during the boring low by dollar cost averaging for months and reduce risk by selling risk assets for many months during the boom.
Current State:
As of October 2023, the crypto market is toward the end of a "boring low" phase. Closing Remarks: It is important to understand the cyclical nature of the crypto market, and have a long-term investment strategy, and being cautious about trying to time the market perfectly.