2022 has indeed been one of the toughest years for cryptocurrencies throughout recent history. About a year ago, Bitcoin reached an all-time high of $69,000. Currently, the price is around $17,000, and the cryptocurrency market capitalization last year dropped from $2.8 trillion to $814 billion. For most people, this bear market is seen as a negative. However, for the contrary investor, this represents an opportunity that only arises every four years in the cryptocurrency market.
The 4 Year Market Cycle and the Bitcoin Halving
The Bitcoin halving is an event that happens approximately every four years, and in the past has had a huge impact on the price of Bitcoin and the cryptocurrency market in general. Reducing the reward for mining new blocks is cut in half, and this is set by a schedule to control the supply of new bitcoins and regulate the cryptocurrency’s overall inflation rate. With that, instead of being rewarded with 12 BTCs, miners get 6 BTCs from now on. The smaller number of new bitcoins being created causes a decrease in the overall supply of new bitcoins in the market, which generates a significant demand for Bitcoin, which consequently leads to an increase in prices and an increase in the market capitalization of the cryptocurrency market. This rise in prices offers great investment potential as it allows investors to buy Bitcoin at a relatively low price before the price rises again. The Bitcoin halving is believed to impact the crypto market cycle and trigger the next bull run, and many investors are looking for ways to take advantage of the situation. Furthermore, due to Bitcoin trading volumes increasing significantly since the beginning of this year, many are speculating that the next bull run could be even bigger than the previous ones. This trend is due to investors being increasingly interested in exploring the potential for Bitcoin price growth resulting from the halving.
Crypto market cycles
Accumulation: At this stage, the market is increasing and adoption is growing. Prices tend to rise and investors may be attracted by the possibilities for high returns. Run Up: This is the high point of the market cycle, where prices have reached their highest level and investor sentiment is positive. Some investors may choose to sell their investments at this point to gain profits. Distribution Phase: This phase is characterized by a drop in prices and investor sentiment. As a result, some investors may sell their investments due to market concerns or negative news, which could further drive prices down. Bearing phase: This is the lowest point in the market cycle, where prices are at their lowest and investor sentiment is generally negative. As such, many investors may see this as the best time to buy the low and wait for the next market spike.
Conclusion: what is the best time to invest in cryptocurrencies?
Many factors suggest that we are at the bottom of the market (based on the crypto market cycle), there will be another rally in the next two years. Bitcoin’s halving cycle and its effect on the four-year cycle of the cryptocurrency market is being respected. Investing in cryptocurrencies also carries a high level of risk due to their volatile nature, as well as the risk of scams and fraud. Therefore, it is important to research and evaluate any project before investing, as well as understand what type of investor you are. However, we have seen in the past that the cryptocurrency market has experienced significant growth and many investors have seen life-changing gains. We are likely to see this cycle repeat itself at some point in the near future. Finally, many investors believe that the best time to invest is during the downturn, or bottom of the market.
