3.3.0. The Crypto Cycle
From the above discussion, can you see the pattern emerging from all these?
Here is the pattern:
1. About every 4 years, Bitcoin Halving occurs.
2. About 6 to 12 months after Bitcoin Halving, the Crypto Bull Season (popularly known as the Bullrun) will start in which the prices of cryptos will shoot to the moon.
3. The Crypto Bullrun usually lasts between 6 to 12 months during which the prices of cryptos reach all-time high.
4. The price of Bitcoin soon crashes after reaching an all-time high, pulling down the prices of virtually all the altcoins, thus, signaling the commencement of Crypto Bear Season (also known as Crypto Winter).
5. The Crypto Bear Season often continues for about 12 to 15 months, and it is often followed by the Plateau Season.
Thus, there is a cyclical pattern, which EdaFace Academy refers to as the Crypto Cycle (see Fig. 2). The cycle consists of three seasons:
(a). Crypto Bull Season (also called the Crypto Bullrun)
(a). Crypto Bear Season (also called the Crypto Winter)
(c). Crypto Plateau Season (also called the Crypto Plain Season).
Fig. 2: The Crypto Cycle
3.3.1. Why the Increase in Price During Crypto Bullrun?
Whenever halving occurs, the amount of Bitcoin released into the market by the blockchain is reduced by half, creating scarcity. After about 6 months, the effect of the scarcity will become very noticeable as traders no longer have large volumes for their transaction and yet the demand for the coins keeps rising.
The overall effect is that the price of Bitcoin will shoot up. Since Bitcoin remains dominant, its price surge will cause the price increase of the altcoins. That is the Crypto Bullrun.
As such, traders would have made good profits and will want to cash out by selling their Bitcoins. As they sell their coins, the number of coins will flood the market, thereby triggering the fall in the price of Bitcoin, which affect the prices of altcoins as well, thus, marking the commencement of the Crypto Bear Season that will last until the next Bitcoin Halving.
The occurrence of the Bitcoin Halving will again trigger the repeat of the cycle.
But how long will such a cycle keeps repeating?
The fact remains that massive sells and buys affect the prices of cryptos. However, as more investors come into the Crypto Market and the market capitalisation grows, the marked surge in crypto prices during Bullruns and the drop in crypto prices during Bear Seasons will reduce, causing this Crypto Cycle to not be so pronounced like it has been.