Time is money: when is the best time to invest in cryptocurrencies to make a profit?
Is there a perfect time to buy cryptocurrencies? When should you hold off, and when should you dive in and start accumulating? EXMO.com's CEO, Sergey Zhdanov, sheds light on these questions by analysing market cycle phases.
To invest smartly, it is crucial to understand market cycles and familiarise yourself with key concepts like accumulation, distribution, bull markets and bear markets.
Market cycles refer to recurring patterns in asset prices over time. They are an essential part of any financial market, including cryptocurrency.
Until 2024, many believed crypto market cycles were tied to bitcoin's halving events. However, the latest halving has shown otherwise. Data from Outlier Ventures reveals that bitcoin's post-halving performance has been the worst on record. Halving no longer fundamentally impacts the price of BTC and other digital assets.
Now, EXMO.com experts suggest focusing on the main phases of the broader market cycle to guide your decisions.
The phases of the market cycle: when to buy and sell
There are four key phases of the market cycle: accumulation, bull market, distribution and bear market. These phases follow one another over time, influenced by different factors, moving in a cyclical pattern. Each phase has distinct characteristics that, when understood, can help investors trade cryptocurrencies more profitably.
Phase 1: Accumulation
The accumulation phase marks the market's transition from a bearish trend, where sellers dominate, to a bullish one, where buyers take control.
This period is characterised by low price volatility and trading volumes, making it the ideal time to accumulate assets. Crypto whales often use this phase to open positions in promising coins.
Accumulation can last anywhere from a few weeks to several months, as we see with bitcoin now. The longer this phase goes on, a bigger price jump is expected when it ends.
While the market is recovering, you can grow your accumulated assets through the passive earning program – Earn – on EXMO.com. Right now, you can earn up to 5% APY on bitcoin, and all you need to get started is just 0.001 BTC in your account. So when the bitcoin price rises, you'll be in a great position to maximise your profits!
A great example of accumulation is the LINK coin between May 2022 and October 2023. During this time, you could have built a position at an average price of $6.50 and gained a 250% return by March 2024, or even more. While waiting for the price to rise, if you started an Earn subscription for LINK you could have gain an additional APY of up to 2.5%!
It is important to note that a price drop isn't the same as accumulation. Accumulation occurs when an asset's price stays relatively flat over a period of time, moving sideways instead of up or down.
It would help if you were selective about your investment projects. Doing your own research is crucial. A weak project won't deliver the financial returns you're hoping for, even if you buy during the right phase.
Phase 2: Bull Market
A bull market follows accumulation, with asset prices rising sharply and trading volumes soaring. Buyers dominate the market and investor excitement grows. FOMO kicks in as more people try to jump on the bandwagon.
There can be brief periods of accumulation during a bull market, but they tend to be short, so it is important to act quickly to take advantage.
Phase 3: Distribution
Once prices hit historical highs, they begin to stabilise. Large investors start selling off their assets to lock in profits, while short-term traders often increase their positions.
Phase 4: Bear Market
A bear market is the final phase, characterised by sharp price declines and widespread panic among traders and investors. Rational thinking often takes a back seat, leading to panic selling. This is the worst time to buy cryptocurrencies, as prices can drop by more than 80%.
How to earn on crypto assets in any market condition
You don't need to wait for a bull market or a distribution phase to grow your crypto assets. It is possible to start earning regular rewards from your savings right now through the Earn passive income program on EXMO.com!
It's easy: simply create a free wallet on EXMO.com, fund it with your preferred assets, and start an Earn subscription. The terms are highly flexible, offering 30 assets and four subscription durations – 30, 60, 90 and 180 days. Plus, if you want to keep earning without worrying about renewing, there's an auto-renewal option.
With the Earn program, you can earn up to 17.5% APY on your assets! For BTC and ETH, we offer rates of up to 5% and 6%, respectively (some of the highest in the market), and up to 12% on USDT and USDC stablecoins. As a bonus, every new EXMO.com user can take advantage of an exclusive 1,000% rate on BTC for one day until the end of September!
Visit EXMO.com, trade smartly and grow your assets while the market is calm.
Final Thoughts
Market cycles are a fundamental part of the cryptocurrency landscape. Even the best assets can lead to losses if bought during the wrong phase. On the flip side, purchasing during the accumulation phase can reduce risk and increase the chances of making a profit.
By understanding cycle phases, investors can make more informed decisions and improve their trading performance.
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