DeFi Market
Crypto moves in cycles: long quiet bottoms, fast climbs, frothy tops and brutal falls. Knowing which part you're probably in won't tell you what happens tomorrow. It will stop you buying at the top because everyone on X is euphoric, and selling at the bottom because nobody is.
The four phases
The model most traders use comes from Richard Wyckoff, who described stock markets this way a century ago. Crypto fits it uncomfortably well.
- Accumulation. Price stops falling and goes sideways at the lows. Headlines have moved on. Volume is thin. Patient money buys.
- Markup. The trend turns up, quietly at first, then loudly as attention returns. Most of a cycle's gains happen here.
- Distribution. Sideways again, but high up. Your barber has a coin tip. Early buyers sell into the enthusiasm.
- Markdown. The fall. It feels worse than the numbers, because hope keeps getting sold on the way down.
Prefer to watch? The short version in under a minute.
Bitcoin has done this twice, recently
Bitcoin peaked near $19,700 in December 2017, then fell about 84% to roughly $3,200 by December 2018. It peaked again near $69,000 in November 2021 and fell about 77% to around $15,500 a year later, as FTX collapsed. Both tops came with maximum confidence. Both bottoms came when the word "dead" was back in the headlines. The shape repeats. The timing and depth don't.
Use mood as a check on yourself
Sentiment runs behind price, which is why it's most extreme near turning points. A simple gauge like the Crypto Fear and Greed Index puts a number on it. It's no timing tool. It's a mirror. If you feel certain and the index reads extreme greed, that's the moment to ask what you'd do if you were wrong. If you feel sick and it reads extreme fear, that's usually not the day to sell everything.
What the model can't tell you
How long a phase lasts. How deep a fall goes. Whether a particular token recovers at all; plenty from 2017 and 2021 never did. And single tokens can break from the pack, falling during a broad rally because of something specific, like a large token unlock.
How to actually use it
As context, not a trigger. Decide roughly where you think the market is, then let project-specific research make the call. The bigger forces behind the cycle, rates, halvings and ETF flows, are laid out in what moves Bitcoin's price.
