The Life Cycle of Cryptocurrency

There are a wealth of cryptocurrencies available on the market at the moment. Some have stood the test of time like Bitcoin for example, while others have appeared with a bang but vanished into thin air.

It’s been over a decade since the cryptocurrency was first introduced to the financial market. It gained masses of attention over the internet, news and even across social media. It’s come a long way from being valued at just a few pennies, to thousands of dollars. But what impact does cryptocurrency have on the financial market and what can you do to make sure your trading effectively.

First things first - how does a cycle affect the market bubble?

A market bubble is only one of the many stages of the overall market cycle. An understanding of how markets work and how cycles develop, combined with the perseverance you need, will help you trade safely and invest in the right cryptocurrency markets.

It doesn’t matter which market you refer to when talking about cycles, because they all go through the same cyclical stages. Why is this? They all have one thing in common – human involvement.

The phases of digital currency’s cycle

There are several phases of your cryptocurrency’s cycle in the market, and each one is just as important as the next.

Accumulation phase – this occurs after the market has finished bottoming and coming down from a previous high. This is usually when innovators, experienced traders and smart money managers begin to buy, as it appears the worst is over. In this phase, valuations are very attractive and many investors are unable to foresee any positive developments.

Mark-up phase – this is when the market has been generally stable for a while and prices are starting to pick up. It’s a difficult time for the market, as any time the prices move higher there are still sellers there to stop the advance. Towards the later phase of this cycle, speculators start to return to the market. Seeing the rise in prices and anticipation of further increases, means that many are often spurred on by greed and the fear of missing out.

The top phase – this stage of the cycle is a little more mainstream when the majority start to dip their toes into the market.

Distribution phase – in the fourth phase, this is where sellers dominate. There’s often a sharp sell-off, followed by a sharp bounce. The prices never actually reach an all-time high and prices begin to drop for a second time.

Mark-down phase – this stage sees new investors and traders that have no been through a complete market cycle yet be among the hardest hit. Many who hung on because their investments had fallen below the amount they paid for them, will now get caught and are now trapped.

What are the markets like today?

The cryptocurrency markets will continue to change at an exponential rate, and keeping up with them can seem impossible. If you’re wanting to get ahead of the curve, there are businesses out there like Tickmill, that offer real time trading accounts within the forex industry. You can start trading within minutes and can even try their demo account to see if it’s for you.

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