Welcome to a Wednesday edition of Cipher Digest. Here’s what we have for you today:

In Todays Digest:

• Market Overview 🌚

• Latest in Web3 🚨

• Chart of the Day - Market Cycles 📊

• What’s with the Market? 🧐

• Tweet of the Day 🐦

Latest in Web3 🚨

• Race for Ether Futures ETFs kicks off with 6 firms filing SEC Applications

• US Government launches investigation into BlackRock over Chinese investments

• MicroStrategy buys another 420 $BTC for $14.4 Million

• Crypto custodian Hex Trust expands European foray with registration in France

In other major crypto news, the self-proclaimed king of crypto Richard Heart is under heat from regulators for embezzling user funds on luxury items. The project he started, HEX, has since been removed from Uniswap.

For those who know dont know who he is, he is a bit of a….. character.

To the SEC claims, this was his response:

Chart of the Day 📊

Crypto Market Cycles: Navigating the 4 Stages for Smart Investing

Introduction

Welcome to our educational newsletter on crypto market cycles! Understanding the various stages of the market cycle can significantly improve your investment decisions in the volatile world of cryptocurrencies.

Whether you are a seasoned investor or a newcomer to the crypto space, grasping the dynamics of these cycles will provide you with valuable insights to make informed choices. In this article, we will dive into each stage of the crypto market cycle and explore strategies to navigate them effectively.

1. Accumulation

Early Accumulation:

The first stage of the crypto market cycle is accumulation, where prices are generally at their lowest, and smart money investors start building positions. During this phase, the market is typically characterized by low trading volumes and subdued price action. Large institutional players and informed retail investors recognize the long-term potential of specific cryptocurrencies and start accumulating assets discreetly.

Mid Accumulation:

As the market gains some stability, more investors begin to take notice and enter the accumulation phase. Prices may show slight upward movements, but overall, the market remains relatively flat. It's a time when investors should carefully conduct due diligence, researching promising projects, and acquiring assets at favorable prices before the next phase begins.

Late Accumulation:

In the late accumulation stage, there is a noticeable increase in price activity, and more retail investors begin to participate. Prices are still relatively low, but sentiment is turning bullish. This is a crucial phase for accumulating positions, as the next stage, markup, is usually triggered by a breakout from this accumulation range.

Navigating Accumulation:

As an investor, it's important to exercise patience during the accumulation phase. Focus on solid fundamental analysis, identifying projects with strong teams, real-world use cases, and potential for future growth. Avoid FOMO (Fear Of Missing Out) during the early and mid-accumulation stages, as prices might continue to fluctuate. Use dollar-cost averaging (DCA) to build positions gradually and mitigate the risk of market timing.

2. Markup

Early Markup:

The markup phase marks the beginning of a bull market, with prices experiencing significant upward momentum. The market sentiment turns optimistic, attracting more investors who fear missing out on potential gains. This is when cryptocurrencies witness rapid price appreciation, often leading to parabolic moves in some assets.

Mid Markup:

As the bull market gains further momentum, the mid-markup stage sees heightened media coverage and retail FOMO, driving prices even higher. During this period, it's common to witness substantial price increases in a relatively short span. However, such exuberance may also lead to increased volatility.

Late Markup:

The late markup stage is characterized by a speculative frenzy and a euphoric market sentiment. Prices skyrocket, and speculative assets may become overvalued. This is typically the peak of the bull market, and while some investors continue to profit, others start considering taking profits.

Navigating Markup:

While it's tempting to ride the bull market euphoria, it's essential to remain cautious during the mid and late markup stages. Set realistic profit-taking targets and consider diversifying your portfolio to reduce risk. Avoid chasing "hot" assets without proper due diligence. As prices rise, remember that a correction may be imminent, so consider taking some profits off the table to lock in gains.

3. Distribution

Early Distribution:

During the early distribution phase, savvy investors begin to realize that the market may be reaching its peak. There is increased selling activity from smart money players, resulting in a slowdown of the bull trend. Prices may start to consolidate or show signs of minor corrections.

Mid Distribution:

As the market approaches its peak, the mid-distribution stage sees increased volatility, with prices experiencing more significant fluctuations. The sentiment starts to shift from bullish to uncertain, and some investors begin to exit positions and take profits.

Late Distribution:

In the late distribution stage, the market often becomes choppy, and selling pressure outweighs buying pressure. Prices may exhibit a sideways or downward trend, indicating that the bull market is losing steam. It's a crucial time to remain cautious and consider preserving capital.

Navigating Distribution:

During the distribution phase, exercising caution is paramount. Be prepared for increased volatility and potential price reversals. Avoid FOMO-driven buying and be selective about entering new positions. Focus on projects with strong fundamentals and potential for long-term growth, as they are more likely to weather the upcoming downturn.

4. Decline

Early Decline:

The decline stage represents the end of the bull market and the beginning of a bearish trend. Prices start to decline, and sentiment turns pessimistic. Many investors who bought at the peak of the bull market might face significant losses, which can lead to panic selling.

Mid Decline:

During the mid-decline stage, the bear market tends to deepen, and prices may experience sharp drops. Fear and uncertainty prevail in the market, and many investors liquidate their positions, leading to further selling pressure.

Late Decline:

The late decline stage is often marked by capitulation, where prices reach their lowest point, and investor sentiment is at its worst. At this stage, market sentiment is overly bearish, and it's common to hear sentiments like "crypto is dead." However, this period also sets the stage for the next accumulation phase and potential future bull run.

Navigating Decline:

The decline phase can be emotionally challenging for investors. Avoid making hasty decisions driven by fear or panic selling. Instead, consider maintaining a long-term perspective and holding onto projects with strong fundamentals. Look for signs of market stabilization and accumulation patterns as potential signals for the next bull market.

Conclusion

Understanding and navigating the four stages of the crypto market cycle can significantly improve your investment outcomes. Remember, timing the market perfectly is challenging, so focus on fundamental analysis, risk management, and maintaining a diversified portfolio. By staying informed and rational throughout the market cycle, you can enhance your chances of success as a crypto investor.

Whats with the Market?

Stocks: 📉

This morning, US stock futures decided to have a grumpy day, all thanks to Fitch Ratings playing party pooper. They decided to give the United States' long-term foreign currency issuer default rating a little downgrade from AAA to AA+. Oh no! 😱 

They're worried about some fiscal stuff and the government deficit increasing. Not the best way to start the day, but hey, keep an eye on the experts who remain upbeat, with Treasury Secretary Janet Yellen dismissing the downgrade as "outdated."

Time will tell!

Housing: 🏠

The US housing market is going through a bit of a tough time. Mortgage rates have been high for weeks, and that's making it hard for folks to buy homes. The Mortgage Bankers Association (MBA) tells us that mortgage applications for home purchases dropped by 3% last week compared to the previous one, and they're 26% lower than the same time last year. Ouch! We hope things get better for homebuyers soon.

Crypto: 🚀

Now let's talk crypto, the thrilling and unpredictable world of digital coins! Yesterday, Bitcoin decided to put on its rally pants and soared by almost 3%!

Why?

Well, MicroStrategy, the tech firm, had some big plans. They announced they're going to buy a whopping $750 million worth of BTC! 🤑 They're using new shares to make this splurge. Remember back in July when they spent $14.4 million on 467 BTC? Yeah, that's pocket change compared to their latest shopping spree! 🛍️

But wait, there's more! 🎉

Bitcoin and Ethereum have been chill lately, with their trade volume taking a little dip. It's all connected to long-term volatility, which is at multi-year lows. BTC and ETH are being all calm and steady, nothing like the wild rollercoaster rides we saw in the past.

BTC has been playing it cool, showing slow but steady gains, unlike those crazy surges during the bull markets. And guess what? ETH, the usually wild cousin, is now acting all calm and collected, just like BTC. It's like they switched personalities! 😆

Chart Watch: 📊

Time to peek at the charts! 🧐 On the 4-hour chart, we see some interesting action. Prices tried their best to break above the resistance at 29,700, but no luck. The rally was a bit short-lived, especially with the stock market having its own issues.

Oh, and if you're wondering where we're headed next, keep an eye on the US indices. Since they have broken below their 20-day moving average, we might see a little pullback towards $29,000, and probably lower.

So, buckle up, friends!

That's it for today's wild market ride! Remember, investing is like exploring a magical theme park; it has its ups and downs, but it's always an adventure! Stay curious, keep learning, and we'll catch you on the next update!

Tweet of the Day