What are Cycles?
Markets move in 4 phases; accumulation, mark-up, distribution, and mark-down.
In the accumulation phase, the market has bottomed and early adopters see an opportunity to jump in and scoop up the asset at a fire sale discount.
In the mark-up phase, the market seems to have flattened out and the early majority is jumping back in, while the smart money is cashing out.
In the distribution phase, sentiment turns mixed to slightly bearish, prices are choppy, sellers prevail, and the end of the rally is near.
In the mark-down phase, late movers try and sell what they can, while early adopters look for signs of a bottom so they can get back in.
Example of a Cycle
Looking at the 2W logarithmic chart of BTC (Bitcoin) and using the Easy Loot Cycle Top indicator, we can identify each previous cycle top in Bitcoin. At the moment, some traders think the top is in and we’re going to dip, but the chart & I disagree. Bitcoin still has tons of room to grow before pulling back and creating another cycle top. Bitcoin’s cycles work in 4-year cycles, or halving where the supply on each Block Reward is cut in half, greatly reducing the amount of Bitcoins generated for circulation.
How to Identify Cycles
Cycles are easiest to identify on higher time frames, the higher the time frame, the easier to spot the general direction of trend. This image shown above of the 2W chart of Bitcoin clearly shows the asset in a general upwards direction since its inception in 2009. Cycles are also easily identified on the charts with the most historical data.