Understanding how the cryptocurrency market cycle works helps to plan purchases and sales, reduce capital drawdowns and rationally use exchange services. History shows that digital assets move in waves - periods of acceleration are followed by deceleration, then the market goes into correction and a new spiral starts again. The better an investor reads the rhythm, the more accurate his decisions. It can also be said that the cryptocurrency market cycle is formed under the influence of supply, demand, liquidity and expectations, and its phases are repeated with variations in duration and amplitude.

What are market cycles in cryptocurrencies

Cryptocurrency market cycles usually refer to a sequence of stages through which the price and the behaviour of participants pass. The classical approach (Wyckoff method, stage analysis) divides any trend into four parts: accumulation, growth/markup, distribution and decline/markdown. These stages are described in the  Binance Academy profile materials and apply to the crypto market using the same principles as equities.

On the practical side, market cycles in the crypto market are manifested through price, volume and sentiment dynamics. During the accumulation phase, the chart is often ‘sawing’ sideways, later there is a breakdown of the range and acceleration of the trend, and after a long rise, large players fix profits and form a ceiling. When there are fewer buyers, a prolonged correction begins.

The main phases of the crypto market cycle

In terms of behavioural economics, the phases of the crypto market look like this:

• Accumulation. After a prolonged drawdown, the asset moves into a sideways range, interest returns gradually, long-term participants become the captains.
• Growth (markup). The price moves out of the range, the trend accelerates, retail audience joins, media activity grows.
• Distribution. Volatility increases, the range narrows, large wallets sell on upward moves, retail more often ‘catches up’ with the movement.
• Decline (markdown). A prolonged correction begins, weak hands exit, the market returns to more stable levels, creating a base for the next cycle.

In sum, these are the growth and decline phases of cryptocurrencies, which repeat at different speeds depending on liquidity and macro conditions.

Historical examples of market cycles

From the history of cryptocurrency, there are a few striking cycles that demonstrate well the patterns of price movements: in 2013, Bitcoin started the year at around $13 and rose to over $1,100 in just twelve months. This was its first major growth, bringing massive attention to cryptocurrencies, but it was accompanied by high volatility and rapid price swings.

The next significant cycle came in 2017-2018. By December 2017, the price reached an all-time high of $19,783, which was the peak of a multi-month bull trend. However, over the next year, Bitcoin fell in price by about 84%, reflecting the classic ‘markdown’ phase - a decline after active growth and profit taking by major market participants.

The third powerful upswing began in 2020, when after a period of accumulation the price rushed upwards again, and already on 10 November 2021 a new record was set: around $69,000. This cycle coincided with growing interest from institutional investors and the launch of new instruments.

In 2024, the market again showed an expansion phase: in March, the previous high was surpassed, and on some days the value of bitcoin rose to around $73,700.

These stages confirm the cyclical nature of the cryptocurrency market - growth is always followed by a correction, and then the basis for a new round is formed.

Reasons for the formation of cycles

1). Programme supply dynamics. Every +- 210,000 blocks, the Bitcoin network cuts the reward to miners in half - ‘halving’. This mechanism reduces the rate of BTC issuance and makes new issuance more ‘scarce’, which changes the supply and demand balance. Coinbase Institutional research shows: past halvings have been accompanied by increased attention and a restructuring of miners' behaviour; that said, there are still few observations for rigorous statistics, so the strength of the effect depends on the context of the cycle.

2). Macro-liquidity and stakes. The correlation of cryptoassets with equities has strengthened post-2020, and monetary policy affects risk appetite: tightening signals liquidity shortages, easing fuels demand for volatile assets.

3). Technological and market developments. The launch of spot ETFs in the US and the rise of onchain activity (Runes/Ordinals) are changing the demand and commission structure, reinforcing individual waves within the cycle.

How to recognise the phase of the cycle and use for investment

Workflow - combine chart, onchain metrics and a ‘thermometer’ of macro conditions:

• Onchain valuation via MVRV. The Market Value to Realised Value metric compares current capitalisation to “realised” capitalisation (the average price of recent coin moves). High values signal an overheated market, and low values signal an attractive long-term zone. Detailed guides and dashboards are available at Glassnode.
• Puell Multiple - pressure from miners. The metric shows the ratio of the current dollar revenue of miners to the 365-day average. High values often coincide with local peaks, low values coincide with moments when the capitulation of miners is over.
• Behavioural patterns. Wyckoff's four-phase structure helps to read accumulation/distribution ranges and look for confirmation through volumes and breakdowns.
• Macro background. Heightened expectations of lower rates often support demand for risk assets, while a tight rate environment cools. Both media reviews of the market and empirical research capture this relationship.

Basic risk management techniques are suitable for practice: fractional purchases on drawdowns (DCA), clear target exit levels, and a fixed proportion of the portfolio for volatile assets. This approach disciplines behaviour in different phases and reduces the dependence of results on a single entry date.

A separate mode is operational: when it is necessary to quickly exchange funds between exchanges/wallets, it is more convenient to use aggregators and exchange platforms, and make price decisions through the above indicators and the context of the cycle.

Competent analysis of cryptocurrency cycles combines behavioural models, onchain data and macro indicators - just such a set gives a systematic understanding of the stage the market is currently in.

Can we predict the next spiral in the future

History suggests that after halving, major movements often unfold after months and sometimes longer - confirmation in MarketWatch summaries and Coinbase reports. That said, the strength of momentum depends on external conditions, and the statistical base is still small. Consequently, the strategy is built around probabilities: ‘base - acceleration - distribution - correction’ scenarios are planned in advance, and risk management remains the main tool. Cryptocurrency market cycles provide guidance, but position control and discipline shape the outcome.

Conclusion

The cyclicality of digital assets is well described by a four-phase model. Historical examples show alternation between powerful expansions and protracted corrections; dynamics are influenced by halving, liquidity changes and technological shifts. Three things are important for practice: read the market structure, rely on measurable indicators (MVRV, Puell Multiple) and plan ahead for each stage - from accumulation to distribution. This approach increases the chances of capitalising on the potential of a volatile asset class and keeping control of risk.

The information provided in this article is for informational purposes only and does not constitute a guide to action, financial recommendation or investment advice. Cryptocurrency investments involve a high level of risk and each investor should conduct his/her own analyses, assess his/her financial capabilities and consult with professional financial advisors before making investment decisions.