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What are crypto market cycles?

Marc Andreessen– the co-founder of the Andreessen Horowitz venture fund, has published a study on the shortcomings of the existing financial system. The Crypto community reacted positively to this material, as it spoke about the prospects of the blockchain in everyday life, which can solve many of the problems that are present in the financial system. After the article was published, a report on the so-called crypto market cycles was published on behalf of the Andreessen Horowitz Foundation itself. It contained information of the following nature: at a time when cryptocurrencies are becoming more expensive, the industry, in general, is developing. This is due to the fact that the media and those who previously didn’t know what cryptocurrencies and blockchain are paying attention to the segment due to its rising prices. The increased capitalisation of the crypto market thus attracts the attention of new individuals, who often bring with them new ideas for development.

  1. 2009–2012 years.
  2. 2012–2016 years.
  3. 2016–2019 years.

At these moments, we were able to see the Tuzemun market, the brightest of which happened in 2017. There are usually five factors that determine all three cycles:

  1. The price of all digital assets is beginning to rise.
  2. Because of the rise in the price of the crypto market in general, it’s beginning to attract the attention of the media and network members who were not previously involved in the crypto industry. Information about cryptocurrencies is beginning to be discussed in social networks and forums.
  3. Those who bring new ideas for the crypto industry also appear among the arrivals. At the same time, the price of digital assets begins to correct.
  4. Later, ideas turn into projects and startups.
  5. After these projects and startups have been established, a new cycle begins, which leads to an increase in the price of digital assets and the attraction of new audiences to the industry, thus provoking a new cycle.

It turns out that as soon as one cycle finishes, the next one begins to take place immediately. This has been confirmed more than once, and Andreessen Horowitz analysts have called this phenomenon “valuable innovation.” Also, after talking to many well-known personalities in the crypto industry, the conversation usually followed the same scenario:

“I learned about cryptocurrencies and blockchains in 2011/2013/2018 (just at the moment of price corrections for each cycle). At that moment, every media report about the outlook for the new sector, and the prices of digital assets were updating to a maximum. I took a serious interest in cryptocurrencies and blockchain. After careful research, I understood that cryptocurrencies — are not about money, but about technology. As a result, I decided to devote myself completely to the Blockchain.”

A team of analysts led by Eddie Lazzarin studied data on crypto companies over the last 10 years. The data from Reddit, GitHub and Pitchbook were taken into account. Due to the data collected, the cyclicality of the crypto market was confirmed not only by words but also by figures. Three main indicators were studied in each company:

  1. Activity of the new company. We analysed the data on the ICO and how successfully it was closed.
  2. Activity of the company’s developers. The data were taken from GitHub and evaluated with the sum of “ stars.”
  3. Social networks of companies. How active was the community within them, how often were there conversations about blockchain and cryptocurrencies.

A year later, Bitcoin became cheaper, it was mentioned less and less frequently in the media, and polemics about it practically stopped on social networks. However, the process was already underway: many startups were developed that were not stopped by the decline in the price of the main cryptocurrency. They didn’t care about the cost of Bitcoin; they wanted to launch their own product, which the crypto community would welcome because they had no choice.

In the same year, 2011, the altcoins Litecoin and Namecoin appeared. Crypto wallets, mining pools, and exchanges began to appear. It was this year that Vitaly Buterin co-founded the Bitcoin Magazine. In general, the development of the crypto industry began, and the prerequisites for a new cycle appeared.

This cycle can rightly be called fundamental because over the past few years projects such as Ethereum, Monero, Ripple, and Dash have been launched. Ripple and Ethereum are the leaders on the crypto list, while Monero and Dash, although slightly behind the leaders, are still in demand. To the present day, Ethereum remains the best decentralised smart contract platform on which many startup block-chains have been built. Projects such as Tron, Waves, Cardano, and NEO have not been able to move it from a leading position.

In 2016, the price of Bitcoin also rose, but without such wild bounces, correction began. Many block-chains of startups appeared, which tried to develop and raise funds. This was the start of a new crypto market cycle.

In any case, the cryptocurrencies and ICOs were heard, which contributed to the emergence of new faces in the crypto community. Bitcoin began to be purchased on a huge scale: this was the business of Wall Street collectors and ordinary factory workers, the only difference being the number of coins purchased. The so-called “Bounty Programs” played a big role in popularising cryptography and the Blockchain — the startup hires users of social networks and pays with its internal tokens, and the user, in return, promotes projects through their own pages.

Thus, by the end of 2017, Bitcoin had updated its historical maximum, which it was unable to beat even today — $20,000. But “crypto-winter” began soon: digital assets began to get cheaper, and some companies and exchanges closed. With all of this, the crypto market was able to establish itself as a young and developing sector.

In 2018, many crypto enthusiasts were very disappointed — the market was hit by a crisis that knocked down Bitcoin by more than 80%, literally destroyed thousands of ICO projects, and caused a real media resonance. The collapse of the cryptocurrency and ICO market in 2018 can only be compared with its monumental surge in 2017. Combines all the ups and downs of the 2016–2019 cycle into one important historical event, such as hype and bubble bloat. Beginning 2016, the bubble didn’t finally blow until 2019, when the ICO market finally died and cryptocurrencies began to occupy other places in the global financial system. However, as the title itself says, everything is cyclical and the new cycle did not take long.

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