Mastering crypto volatility: Turning market cycles into long-term opportunities

guardian.ng:

Cryptocurrency is often called the wild west of finance – fast, unpredictable, and full of opportunity. One day, Bitcoin is soaring; the next, it’s dropping. But here’s the thing: these cycles aren’t random. In fact, they closely mirror traditional economic cycles, as described by hedge fund legend Ray Dalio. Understanding these patterns is the key to turning crypto’s chaos into long-term gains. Let’s break it down. The market cycle involves the boom, the bust, and the comeback. Every financial market – stocks, real estate, and yes, crypto – moves in cycles.

  How they typically unfold

Crypto follows this same rhythm – just at turbo speed. It moves differently (and faster) than traditional markets. Unlike the stock market, which is influenced by earnings reports and interest rates, crypto is shaped by:

In 2021 Bitcoin dropped by over 50 per cent when China banned crypto mining. But within months, it rebounded as adoption grew elsewhere. Savvy crypto users are able to track what’s happening in one part of the world and establish correlation with other markets.

Timing the market

Trying to buy at the lowest point and sell at the peak is nearly impossible. Even the pros don’t get it right every time.

What works is to recognise the signs of each phase such as:

The key is to think long term. The S&P 500’s average annual return is around 10 per cent. Bitcoin’s 10-year return is a  mind-blowing 1,576 per cent. Even after downturns, crypto has consistently rebounded faster than traditional assets. Stablecoins are secret weapon against volatility

For those who want to stay in crypto but avoid wild swings, stablecoins offer a solid middle ground. These digital assets are pegged to stable currencies (like the US dollar), providing:

Stabl