Markets go through different phases of its cycle. The present bear market (the present downward moving market in the crypto space) is an opportunity to consider bitcoin’s many ups and downs and how to best position for its next leg up.

Generally, markets( any type be it commodity, forex, bond, stock etc) pass through the following phases

The accumulation phase

The markup phase

The greed or late majority phase

The markdown phase

To make consistent profits in the financial markets (especially the cryptocurrency markets), one needs to understand these various phases of the markets to know when to be in the markets and when to be out. The best time to buy into a particular asset is during the ACCUMULATION PHASE. Let’s dive into what this really is and tie it up with the “deaths” of bitcoin and how you be best positioned for a financial turn around in bitcoin’s next bull run ( upward moving market).

The ACCUMULATION PHASE occurs after the market has bottomed and value investors and money/fund managers move in to buy (these group of investors are referred to in investment cycles as SMART MONEY). The Asset value at this phase of the market cycle is very attractive as the asset is going at a discounted price. You know you are in this phase when the asset price is trading sideways (volatility is gone). The army of “get rich quick” speculators are gone (the lambo boys crew) and overall sentiment is generally negative. This phase is called the accumulation phase because SMART MONEY i.e seasoned investors and the super rich are busy accumulating the asset in this phase. This is the very opposite of what dumb money (i.e your average retail, day to day, uninformed investors) do. They buy at the stage of euphoria (i.e the greed or late majority phase). Remember the price moves of bitcoin in November and December of 2017?

Bitcoin’s many “deaths”…….

JUNE 2011

Bitcoin moved from a price of $0.95 in January of 2011 to reach a valuation of $32 in June of the same year. it, however, fell from $32 in June to $2 in November of the same year. A loss of 94% of its valuation at the time. This move brought out the naysayers in their numbers and they began to proclaim the demise of bitcoin.

JANUARY OF 2012

Almost immediately after the Nov 2011 crash, bitcoin price began to increase and it hit $7.40 in January of 2012. By the end of the same month (January) however, it had dropped 49% from $7.40 to $3.80.

APRIL 2013

The period between January 2012 -2013 was largely uneventful. The beginning of 2013 brought in another bull run as bitcoin hit a new all-time high of $260 by April of 2013. It began to crash almost immediately and settled at about $40 (an 83% loss) by June of the same year

NOVEMBER 2013

Bitcoin began to move higher almost immediately after testing the June lows and made another all-time high of $1200 by November of 2013 but immediately capitulated to below $500 by December of 2013.

We should note that for every occasion that bitcoin crashed. Detractors and naysayers had a field day. There’s a website that has documented the call for bitcoin’s death by financial egg-heads a whopping 317 times here.

The Present Crash

From its low of 2014, bitcoin climbed steadily through 2015 & 2016. It broke the $1000 mark again in January of 2017 and had a spectacular ride through 2017 hitting a new all-time high of $19,450 in Dec 2017and it has since been on the decline. As at the time of writing this (Nov. 2018), it is currently trading at $4,800

Tying It All Together

Now, let’s take this back to where we originally started…… the discussion on the phases of the markets….. Smart money (seasoned investors, fund managers) don’t buy assets when it’s all honky dory and there’s euphoria in the markets. No, they wait patiently…… They wait for the accumulation phase…… They wait for when there is “blood on the street”. They wait for when asset prices fall. They wait for when all the weak hand (retail, day to day investors, who bought at the height of the euphoria, probably by taking a mortgage i.e. borrowing money against their houses) have been severely burnt and then they buy in and invest! This is the strategy of the Warren Buffets of this world and if you want to play this financial game the same way the top 1% do, then you must follow their lead and do the same.

The rich will always be richer. Don’t get it twisted. The upper 1%, the supper rich ain’t going anywhere, anytime soon. The best good you can do yourself is to learn what they do ( they build businesses or invest strategically or do both); how they do it (in investing, they do the exact opposite of what the herd i.e the unsophisticated investing masses does. They buy and invest in fundamentally strong assets when the average Joe doesn’t want to have anything to do with it) and do just that.

CRYPTOCURRENCIES/TOKENIZED ECONOMY ARE THE FUTURE

In the near future, think 3-5years. Almost all assets will be tokenized. The decentralized blockchain technology (the technology on which bitcoin/cryptocurrencies are based) would probably be used as the technology underlying all financial assets. And the world would have already begun the shift from fiat currencies as units of accounts and medium of exchange to cryptocurrencies. Early entrants will experience the transfer of wealth that is coming into the cryptocurrency space. The world is gradually losing faith in fiat currency and our current economic paradigm based off of it. The shift centralized monetary systems to decentralized one has already begun. Think bitcoin and other cryptocurrencies already had a phenomenal return on investment? Brace up, the show has just already begun. Bitcoin has been projected to hit $250,000 per bitcoin by 2022. You can be part of the coming wealth transfer by learning what the decentralized economy is and how you can begin to invest in it. We in the “developing economies”, our country, Nigeria as a case in point have this unique opportunity to begin investing today in bitcoin/cryptocurrencies. The decentralized economy based on the blockchain/cryptocurrencies provides a level playing field for everyone. The farmer in Damaturu in Yobe state, Nigeria has the same opportunity to invest in the same asset as the sophisticated investor on Wall Street.

If you would like to know how to begin to get involved and invest in decentralized blockchain startups, bitcoin and other cryptocurrencies click here

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