Crypto Market Cycle: What Is It and How to Profit From It

Understanding what a crypto market cycle is matters enormously. It’s one of the reasons trading takes years of experience to master …

Generally, you start to feel genuinely comfortable after about 4 years…😎

📢 The goal of this article is to shed light on the money flow movements at play in the cryptocurrency market and, above all, how to profit from them!

Crypto Market Cycle: Is There a Difference?!

Among the phrases that get newcomers most excited, here’s a classic: “Alt Season”. It’s a period traders are especially fond of, thanks to the parabolic curves it tends to produce. 🚀

The catalyst for an alt season comes from the well-known principle of the money flow cycle.🔄In this article, we’ll look at how money moves around the crypto market. Get your notepad ready, because this article is packed with tips you’ll be able to put to use fast … 📝

❓ Does any of this sound familiar ❓

You open a short position because a red wick briefly pokes below a support. From that point on, fear grips you at the mere thought that price is about to rip higher … and you pull off a lovely panic sell.

Or maybe… you open a long because price is flirting with a resistance and “it looks like it’s about to break out”. You give in to a lovely bout of FOMO and CRACK; price tumbles.

If all of this sounds familiar, it just means you trade … 😩

You’re not alone. In fact, emotion and psychology are two things that are easy to anticipate. That’s one of the reasons it’s almost just as simple to spot and understand the liquidity flow cycle.

So now let’s take a look at … how to profit from it 💰 !!!

Crypto Market Cycle: Liquidity in the Market

Bitcoin ➡️ TOP 10 ➡️ TOP 200 ➡️ and the rest …

💹 When BTC traders see price and their profits climbing, their natural reaction is to wonder where to redeploy the fresh liquidity they now have on hand. As BTC’s price keeps rising, traders turn to other high-cap cryptos like ETH that haven’t pumped yet. That’s why, for a long time, ETH would follow BTC by a few hours or a few days in its pump.

This cycle repeats between the assets that have already pumped and those that haven’t yet, until the capital ends up parked back on BTC.

For example, a trader might sell their BTC to get ETH, then sell again to buy into Solana, and finally will probably sell the Solana to diversify into low-cap assets. 📈

Knowing how to rotate between BTC and altcoins is fundamental if you’re a trader looking to maximize your profits during the bull market…

👇 3 Essential Things to Understand About Market Cycles 👇

1️⃣ It’s Rare to Catch Tops and Bottoms Perfectly: We’re Not Robots!

Rotating between BTC and altcoins is tricky! If you sell your BTC too early, you’ll probably miss the parabola and, in the meantime, even if your alts hold their value in FIAT, they’ll lose ground against BTC…. What a headache!

Sell your BTC too late and you’ll probably watch the alts take off without you, leaving you on the sidelines and sending your risk/reward ratio tumbling.

To avoid being at the mercy of market cycles, here are 2 simple solutions:

🚫 Stick to your risk management and never trade with your entire portfolio. It’s also advisable to hold part of your BTC for the long term and never sell it for alts. By long term, I mean a horizon of several years or even decades. As a result, the point is to be precise with your position sizing. This will certainly make your decisions easier from a psychological standpoint, because you’ll have a slice of the pie either way, even if it’s a smaller one,

🚦 You can also stagger your position entries and exits by applying the principle of DCA. This will let you smooth out your entry and exit prices.

2️⃣ Crypto Market Cycle: Diversify Your Portfolio!

Since altcoins are less liquid and less capitalized than Bitcoin, the Whales will have all the more ability to manipulate prices and make you bear the consequences. 🤹

Whales and other so-called Pump & Dump groups make altcoin trading far riskier. That’s why I recommend true diversification when you move your BTC into Alts.
As an extra piece of advice on this point:

1. Adjust your position size according to the risk each of your investments presents.

2. Remember to take your profits in USDT or other stablecoins so you have real buying power when corrections come … Stay liquid and NEVER forget your risk management. 💵

3️⃣ Crypto Market Cycle: Trade the Trend!

While technical analysis is essential for building an effective trading plan, even during a range, if BTC takes a nosedive, the alts are very likely to follow … So don’t forget the overall trend that BTC sets across the entire market!

Trading in line with the overall trend will help you avoid losing a lot of money during periods of uncertainty! 🤔

👇 To make things easier for you, here are 2 simple tricks 👇

1. Watch the ETH/BTC pair directly. When ETH outperforms, it likely means an alt season is on the way!

✅ A small- or mid-cap alt that’s bullish with the right setup is all the more likely to explode if ETH is bullish too …

2️. Keep an eye on BTC dominance:

When BTC dominance rises, it means we’re in the first phase of the cycle, namely BTC accumulation.

Whereas if you see BTC dominance falling, it means the second phase of the cycle is underway and traders are starting to bet on alts again. 🔁

❌ It’s important to understand that the Captain offers you no certainties, just food for thought that you’ll refine yourself as a responsible trader! Our job isn’t to predict the future but to use a whole host of data to define trends and probabilities! Sometimes the probability rate will be higher. That’s no reason to forget your stop and your risk management! 👍