The bitcoin bull market has never been my favourite time of the cycle; sure, I love cheerleading the price appreciation and vindication that comes with backing the right horse. In addition, the normie fanaticism that comes with it and the growing interest in the asset I store my productivity in peaking is an exciting time. However, price appreciation, while fun, comes with a host of distractions that dilute the true messages of bitcoin, such as self custody and protection against fiat debasement.
The bull market is great for marketing, but it comes with its own set of issues, like overconfidence that spills into leveraged trading and retail focusing on trading the asset and buying tops and losing their shirts in the process, blaming bitcoin for their losses and not taking the time to learn how to manage this pristine asset and why it’s different from anything else they could own.
Additionally, the loosely tethered leveraged bets on bitcoins price, known as the altcoin market, also take advantage of the FOMO. A lot of capital gets caught up in funding these scams. Once the bitcoin market has its eventual blow-off top for this cycle, it not only takes with it liquidity but interest in the asset, and bitcoin is once again pronounced: “dead”.
What is the crab market?
Once bitcoin has “died”, and the normies go back to trading other assets, the new supply coming online from miners selling, and the daily demand for bitcoin begin to get “stuck” in a certain range; this consolidation phase is known as the crab market.
The longer crab markets continue, the longer period it provides bitcoiners to stack bitcoin at a premium, reduce your cost basis from all the tops I purchased during the previous bull run, especially if you are dollar-cost averaging, and helps you build a larger stack. As someone of modest means where a few satoshis per unit of fiat currency traded makes all the difference to me, the crab market is my absolute favourite time.
Crab markets are when you can make a dent in your stacking goals, and it really is the best time to build your long term hodl. As bitcoin transaction volumes are also far lower during these times, it’s cheaper to use the network and move your bitcoin on-chain, making crab markets are even better for taking self custody.
During the quiet times, it also allows you to focus less on price and more on the other aspects of bitcoin, like learning about self custody, taking hold of your bitcoin, setting up your bitcoin security or creating your bitcoin inheritance plan.
If you’re trying to onboard your precoiner friends, the crab market is the best time to do it; people are less distracted by the crazy price action or put off by the volatility and are more receptive to your arguments. You can pitch them on taking their 1% allocation during these times or teach them how to dollar cost average and get them into positive bitcoin habits that will benefit them come the next bull run.
If there is one strategy that gets supercharged during the crab market, then it’s taking on the dollar cost averaging method of accumulating a position. When you don’t have the temptation to move in and out of the market because of price action, it makes it far easier to stick to a routine.
You can stack sats for yourself in the crab market but also stack stackers who will be gobbling up cheap sats as they start their bitcoin journey.
Benefits for bitcoin businesses
If you’re a bitcoin business, you’ll know how hard it is to deal with the volatility if you are to settle payments with bitcoin and the opportunity cost involved in your various bitcoin transactions. During a crab market, the volatility is relatively dampened, lowering opportunity cost losses.
You can also plan better as you can work on a certain range for building your treasury and runway, and with that stability comes confidence in making decisions and developing your business or product. It’s often why these consolidation phases or bear market phases are known as the building phase among bitcoin companies.
Another benefit of liquidity leaving the bitcoin ecosystem and reduced profits in trading encourages investors to look at other opportunities. These are often the times when angel investors and venture capital look to fund businesses that will build into the next bull run.
Getting into mining
When bitcoin begins to trend downward and find a range, you’ll also find that some miners feel that it’s not worthwhile to continue operations, and competition for mining rewards are reduced; this is not always the case, but it’s far more likely than when the price is ripping upwards, and the profit motive to mine is obvious.
During these crab markets, you also have a chance to calculate mining profitability using the range bitcoin finds itself in. You can make better economic calculations about how you get into mining and the evaluation of sunk costs you incur once you set up your respective mining operation.
Less competition for mining may mean more satoshis for your energy expenditure if the difficulty adjustment trend downwards, but your fiat costs may not make as much sense. If, however, you’re mining with the intention to stack non-KYC sats or stack sats for the long term, it can be a great time to get set up.
How do you feel regarding bitcoin’s crap market?
It’s important to remember that markets evolve, and cycles exist and are ever-changing. While some hodlers might not care as they simply dollar cost average into the market, others are looking to skim a little more off the top. In the crab market, you face less competition for satoshis, and you get to secure positions you would not have been able to during the bull market.
For those that got in during the run, it’s an opportunity to average down your cost basis, while those who are consistent stackers get the chance to increase their holdings for the long term. As bitcoin moves towards its next halving and fiat continue its increasing debasement, these price ranges are unlikely to be something we see again.
If we look at all previous cycles, the consolidation phase range is never a price point you get to see again post halving, and once the next blow-off top cleans out and bitcoin is repriced for its current demand meeting its current inflation rate, a new and most likely higher price range will be the new consolidation range.
These crab markets are often seen in hindsight as the point where you should have got in and seized your opportunity to take a chunk of bitcoin that no one can take away from you.
Understanding the bitcoin market cycle and the phase of the market is a necessary and prudent approach when determining the best time to buy or at what points to set limit orders so you can acquire more bitcoin for your buck, regardless of if we’re in a consolidation or highly volatile phase markets.
Give us your take on the market
Are you the type to prefer the bear market or bull market phases, or do you like the quiet, slow and steady grind of the consolidation phase? Let us know in the comments down below.