Despite it being widely recognized that these cycles tend to repeat every four years. But what exactly causes these repeated losses? Let’s break down the factors that often lead to poor decision-making.
Understanding the Crypto Bull Market Cycle
Historically, crypto markets follow a four-year cycle, with a bear market typically spanning the first three years, followed by a shorter bull phase. For instance, the cycle from 2014 to 2018 showed approximately 177 weeks of a bear market before a 34-week bull run ensued. Similarly, the 2018 to 2022 period experienced a bear phase of about 157 weeks, with a subsequent 47-week bull run. As we approach 2026, the market remains bearish, given that no new all-time highs have been firmly established or defended. This cyclical pattern sets the backdrop for how market participants typically react emotionally and psychologically, often to their detriment.
The Emotional Stages of Market Cycles
A bull market cycle can be seen as a journey through varied emotions. When prices reach a new peak, many investors feel complacent, viewing the drop as temporary. However, as prices continue to fall, feelings shift from anxiety and denial to outright panic, often resulting in hasty decisions that lead to significant losses. This phase of fear and capitulation is followed by a period of anger, depression, and disbelief, where markets trade sideways, and many remain wary of re-entering. Finally, as prices begin to rally, optimism and hope gradually take over, leading to a renewed sense of euphoria that ultimately culminates in yet another cycle peak.
Why This Pattern Leads to Repeated Losses
Combining the market’s cyclical nature with its emotional toll reveals why many investors repeatedly lose money. During the euphoric stages of a bull market, investors often enter positions at elevated prices, only to face significant declines as the cycle turns bearish. In bear markets, they may hold onto assets with declining values, fearing further losses. Then, as prices recover, many either hesitate to re-enter or get in too late, missing optimal profit opportunities. This cycle of emotional highs and lows underscores why knowledge of bull market cycles alone isn’t enough—understanding the psychology behind it is crucial to avoid costly mistakes.
