Last Cycle -> This CycleNo two cycles have ever been exactly the same and it remains to be seen if that will ever happen. Bitcoin has thus far demonstrated a certain amount of cyclicity and predictable behavior on a 4-year time scale that has been widely studied and written about. Given BTC's overall influence on the asset class, we'll make the assumption in this idea that ADA can also exhibit a certain amount of cyclicity and predictable behavior within a similar time period.
I'll start by defining 4, temporal 'parts'. From cycle to cycle they do NOT translate exactly and it's possible I'll look back in two years and realize I drew them wrong. Regardless of this, let's explore.
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Part 1 - The premature "Rally"
The rhetoric of "This time is different" and "We're going to see new ATH's next month" are particularly strong. This "Rally" usually starts towards the end of the pre-halving year or sometime early in the halving year. Positive USD price movements set the stage for a short staged, preliminary mania before the inevitable lull.
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Part 2 - The Pre-Parabolic lull
After seeing a 2x - 6x return from the cycle bottom, which is usually quite nice given years of mostly weekly red candles, a summer or late fall lull sets in.
The rhetoric of "Crypto is dead" and "It's never going to go up again" emerge.
The prior cycle, at least for ADA, appeared to be much shorter than this cycle's early new ATH ~6 months ago for BTC. Given bitcoin had a long cooling off period time year, it's not particularly shocking that ADA did as well.
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Part 3 - The first kickoff and the 35% downwick
Cue the US elections and like clockwork the asset class kicks off. BTC breaks 100k for the first time, ADAUSD skyrockets from ~$0.30 to ~$1.30.
IF YOU TAKE NOTHING ELSE FROM THIS POST AT LEAST CONSIDER THIS: ADAUSD, like ETHUSD, does not exactly have a great December track record during the halving year. Last Cycle, ADAUSD saw a -35% downwick from the local high to the local bottom. Ask yourself: Do you think this flushed some people out? Do you think some panic sold?
Nobody, not me, not anyone, knows where the USD valuation is going. I believe it's going to go higher but all I know for sure is that where we are now...December of the halving year...is behaving, overall, quite similar to December 2020. ADAUSD skyrockets to $1.30 and then wicks down to the $0.77 range.
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Part 4 - The Real Parabolic Rally
Cue the post-halving year which we are less than 2 weeks away from. In 2020, from the last week of December to the last week of February, ADAUSD rallies 834%.
834% in 8 weeks. And during this time, it printed 2 weekly red candles in the later half of Jan that sent the price down -34%. And then, at the start of March, it printed two more red candles that sent the price down -25%.
But the rally wasn't over because the USD valuation in the Spring of 2021 was still in the low $1's. It wasn't until the second week of May that ADA hit $2 for the first time and it wasn't until late August it hit $3.
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I believe the real parabolic rally hasn't start yet. I believe that if ADAUSD behaves similarly to how it did last cycle, we're going to have an exciting next 10 weeks, a cooloff in March+April, and an exciting start to summer.
There will be turbulence. There will be doubt. This is crypto, this is the nature of trading.
I suspect there will be weeks after a new local high is printed that we're all down 20%-40% and that's okay, it doesn't imply the end of the cycle.
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This isn't financial advice and this isn't investment advice, but now that we're still in the <$1.00/ADA it's probably worth determining what you want your exit strategy to be.
Good luck out there.
