Bull markets turning bearish can seem completely random and impossible to predict. However, when looking at historic data and price charts at a high time frame, we can spot certain patterns that could give an idea about when market cycles can be expected to change. In this article, we’ll discover the most notorious patterns of the crypto market’s bear and bull cycles, and try to see how they can help in developing a more accurate picture of what’s ahead.
The cyclical change of bull (continuous positive price action) and bear (longer decrease in prices) markets is a healthy and essential part of every asset, cryptocurrencies included. As such, it should come as no surprise that after each bull market a bear market will follow, however, predicting the exact time of the change is challenging.
While no pattern or analysis provides a guaranteed outcome, certain things can help ease the seemingly impossible task of guessing when the tide will turn. All the below patterns are general and subjective observations, thus they should not be used as standalone, absolute sources of truth.
The first pattern that we can observe when looking at the global crypto market’s aggregated price chart on an all-time frame are dips that notoriously happen around the late April, early May spots. For instance, May 2021 brought a massive drop in crypto prices, and so did late April 2022. Interestingly, a dip also happened as early as May 2018.
This phenomenon is often called “Sell in May and go away” by investors, which essentially argues that because of the great weather and summer vacations’ money demand, many retail investors liquidate parts of their portfolios and don’t spend as much time monitoring their assets. Conversely, during the colder months, when most of the world is forced inside where there are less physical things to do, investors have more time on their hands and focus more on investing than during the warm period.
After the historic bearish turns of May, prices seem to bottom out around each July the same year. This observation is not as established as the one mentioned above, however, we could see it work in July 2021 when prices did, indeed, bottom out.
Understanding how markets work and fluctuate should be an essential part of every investor’s journey. Often, however, this does not mean highly technical analysis, or extensive research, but a simple look at what historic market data tells us. While no data and past performance can guarantee the desired outcome, investors can have a more structured and logical idea about when prices decide to change their course—for better, or for worse.
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