Market cycles: the rhythm underneath everything
Crypto moves in long waves. Knowing roughly where you are does not tell you what happens next week, and it changes how you interpret everything you see.
The four phases every market passes through
These phases are psychological, not mechanical. There is no timer. They describe how groups of people behave when prices move, which is why the pattern repeats across centuries and asset classes.
The Bitcoin four year cycle
Bitcoin's issuance halves roughly every four years, at a fixed block interval. Historically, price has tended to rise strongly in the twelve to eighteen months after a halving, peak, then fall heavily and spend a year or more in the doldrums before the next.
Whether the halving causes this is genuinely argued about. The supply reduction is real but small relative to daily trading volume. A plausible alternative explanation is that the halving is a widely known, heavily anticipated schelling point that coordinates attention and capital, which produces the effect by expectation rather than by supply.
How capital rotates
Within a crypto bull market, money tends to move in a fairly consistent order, and knowing it explains a lot of otherwise confusing behaviour.
- Bitcoin first. New money entering the asset class overwhelmingly arrives here. Bitcoin dominance, its share of total crypto value, rises.
- Ethereum and large caps next. Once Bitcoin holders are up, some rotate into larger alternatives seeking more movement.
- Mid caps. Established projects with real usage. Moves become larger and faster.
- Small caps and memecoins. The final phase, where returns are most extreme in both directions. Bitcoin dominance falls sharply. This is what people mean by "altcoin season".
- Back to Bitcoin, then to stablecoins. When it turns, capital retreats in reverse order, and the smallest assets fall furthest and recover least, if at all.
What a cycle position actually changes
It does not tell you what happens next week. What it changes is your default posture: how much risk you are willing to hold, how quickly you take profit, and how sceptical you are of enthusiasm.
The uncomfortable honest bit
Nobody knows where they are in a cycle until afterwards. Every top looks like a pause while it is happening and every bottom looks like the start of something worse. Anyone stating the current phase with confidence is guessing, however good their chart looks.
That is precisely why mechanical rules, sizing, tranches, rebalancing, are worth more than accurate cycle calls. They work without requiring you to know something unknowable.
BEFORE YOU MOVE ON
Common questions
What is the crypto four year cycle?
A pattern where Bitcoin tends to rise strongly in the year or so after each halving, peak, then fall heavily. It is based on only a handful of observations, and a large number of participants act on it, which makes it partly self fulfilling.
What is altcoin season?
The late stage of a bull market where capital rotates out of Bitcoin into smaller assets, so Bitcoin dominance falls and smaller tokens move far more sharply in both directions.
What is Bitcoin dominance?
Bitcoin's market capitalisation as a percentage of all crypto. Rising dominance usually means capital is concentrating; falling dominance during a rise usually means it is rotating into riskier assets.
Risk warning: crypto is highly volatile and largely unregulated. You can lose everything you put in. Nothing here is financial, investment or tax advice.