Decoding Market Cycles with AI

They say history doesn't repeat, but it rhymes. In crypto, this rhyme is the Market Cycle. Understanding where we are in this cycle is the difference between buying the top and buying the bottom.

The 4 Phases of a Market Cycle

Every asset moves through these distinct phases:

1. Accumulation Phase

The "smart money" phase. Prices flatten out after a downtrend. Sentiment is boring.

• AI Strategy: This is ideal for Grid Trading Bots which profit from the sideways chop while accumulating cheap coins.

2. Markup Phase (Bull Run)

Price breaks out. FOMO kicks in. The trend is clearly up.

• AI Strategy: Time for Momentum Trading. The AI loosens stop-losses to let winners run.

3. Distribution Phase

The top. Volatility increases but price stalls. Smart money intends to sell to retail investors.

• AI Strategy: Our AI often flags "Bearish Divergences" here (price up, momentum down). It switches to defensive strategies or cash.

4. Mark-Down Phase (Bear Market)

The crash. Panic selling.

• AI Strategy: Short-selling bots or aggressive DCA (Dollar Cost Averaging) to lower entry price for the next cycle.

How AI Identifies the Phase

Humans are emotional; they see what they want to see. AI looks at raw data:

• Volume Profile: Is volume rising on green candles (Markup) or red candles (Mark-Down)?
• Volatility Index: Is the market too quiet (Accumulation) or too loud (Distribution)?

By aligning your bot strategy with the market cycle, you stop swimming upstream.