All markets go through periods of expansion and contraction. During expansion, or a bull market, there is an atmosphere of optimism, accompanied by confidence and greed, which usually stimulates buying activity.
During market cycles, a cyclical or retroactive effect is often observed. For example, sentiments become more positive as the value of assets increases, which contributes to spreading this trend among traders and further market expansion.
Sometimes the sense of greed and confidence among traders can lead to “inflating” the market and the emergence of a financial bubble, when investors overvalue assets and expect their further growth.
As prices rise, a peak occurs, representing the highest point of financial risk. Then, a distribution phase may follow, where assets begin to be sold gradually, or prices may start to decrease without a clear distribution phase.
When the trend changes, the state of euphoria is replaced by self-reassurance, followed by a period of anxiety, fear, and panic. Traders may deny the current market situation and continue to hold positions at a loss, hoping for a market reversal.
Further price drops can intensify the selling wave and lead to market capitulation, where asset owners give up and sell them at unfavorable prices.
As prices stabilize and volatility decreases, the trend fades, and the market may move into a sideways movement phase, known as the accumulation stage.
How Will the BTC Halving Affect the Cryptocurrency Resale Market?
The anticipated Bitcoin halving is set to take place at the end of April, when the mining block reward will be halved. This event is already heating up the market (as I’ve already mentioned), however, its impact on the arbitrage sphere is not entirely obvious.
❗️ After the last BTC halving in 2020, the cryptocurrency arbitrage market grew on the news of the asset first falling by 60%, and then — of its peak growth.
While the market was in terrible instability, arbitrators made capital even on the simplest pairs, as traders rushed to sell or buy, and the more active the interest in such cycles, the stronger the resale market.
Undoubtedly, the upcoming halving will attract the attention of huge capitals: from institutional investors to private funds — and at some point, the market will soar.
It’s important to understand that buying and selling different assets is almost a continuous process. And if 10 traders leave crypto today, and 100 come tomorrow, for us, this is definitely a plus.
Therefore, half a year ago, when the resale market was again predicted to stagnate, we, on the contrary, began to scale and expand our teams — because one needs to be prepared for such events in advance.