1. Crash
What Happens🔸A major market downturn occurs, usually triggered by fear, macroeconomic conditions, or over-leverage in the market. Both Bitcoin and altcoins see sharp declines.
Key Insights🔸 This phase shakes out weak hands and resets market conditions. Capital flow decreases as traders adopt a cautious approach.
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2. Bitcoin
What Happens🔸 Bitcoin typically leads the recovery after a crash. It attracts most of the new capital due to its reputation as a "safe haven" in the crypto market.
Signs to Watch🔸Rising Bitcoin dominance (BTC.D) as money flows primarily into BTC rather than altcoins. Ethereum and altcoins stay stagnant or rise only slightly.
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3. Ethereum
What Happens🔸 After Bitcoin stabilizes or enters a consolidation phase, Ethereum (ETH) begins to outperform as it’s seen as the next most significant asset in the crypto ecosystem.
Signs to Watch🔸Ethereum’s performance starts decoupling from Bitcoin, and ETH/BTC trading pairs show strength.
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4. Large Caps
What Happens🔸 Once Ethereum gains momentum, large-cap altcoins (e.g., Solana, Binance Coin, Cardano) start performing well as investors rotate profits into other prominent cryptocurrencies.
Key Insights🔸These projects often have strong ecosystems or use cases, making them attractive during this phase.
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5. Small Caps (Altseason)
What Happens🔸 Finally, small-cap altcoins see explosive growth as traders seek higher returns. Speculative investments dominate, with many coins achieving extreme gains in short periods.
Key Insights🔸 This is the most volatile phase. While the potential for profits is high, so is the risk of loss as the market becomes overheated. At this stage, Bitcoin dominance typically falls sharply.
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Cycle Rotates Again
After altseason, speculative excess leads to overvalued assets and the likelihood of another Crash, restarting the cycle.
How to Use This Cycle📊
Understanding this sequence helps traders and investors⤵️
➡️Allocate capital strategically🔸Shift funds into Bitcoin during recoveries, then gradually diversify into ETH, large caps, and small caps.
➡️Monitor Bitcoin Dominance (BTC.D)🔸 This is a critical indicator for identifying when the cycle may shift phases.
➡️Take profits during Altseason🔸The smaller the market cap, the riskier the asset becomes.
