Learning the friendly way

While cryptocurrencies have been around for over a decade we continue to learn and observe new things in the market to this day. Over the years many trading patterns have been repeated, regulation has changed the nature of the game and of course, volatile price movements have played out.

While this sounds unpredictable and scary, it has also allowed trading analysts to observe the cyclical nature of these activities. This information allowed investors and customers to better understand the crypto market cycles, and more importantly, use them to their advantage. 

In this article, we'll show you how to not only understand the crypto market cycles but how to identify and use them to your advantage.

What are market cycles?

Reaching beyond the cryptocurrency market and across a wide range of assets, market cycles are no stranger to stocks, commodities, etc. They are regular occurrences and can be summarised as the stages in between the all-time high and the low of a market. Whether trading traditional stocks, money, or assets built on blockchain technology, market cycles are prevalent across the board.

The length of a market cycle can vary and will depend on what style of trading one is conducting (short term/long term) however they are always categorised by four main components. These phases in the cycle are categorized by the accumulation, markup, distribution, and markdown phases and will be outlined based on analysis and research below.

The four phases of a market cycle

1. Accumulation phase

This takes place when the market has reached a low and prices have flattened. While many view this as a negative stage in the market cycle, many others (particularly ones with experience in the crypto market) view it as a prime time to buy the asset. When traders accumulate the undervalued asset, this is referred to as "buying the dip" and is often a lucrative endeavour. 

These low price swings are often paired with a lot of indecision in the market as weak hands exit the market and long term traders enter it, representing a period of consolidation. This typically happens before an uptrend. The accumulation phase is over when the market sentiment moves from a negative stance to a neutral one. During this phase, a lot of money is both entering and leaving the market at the same time.

2. The markup phase

As the sentiment shifts, the market begins to climb and more stability takes shape. Typically more experienced traders will continue buying, further igniting the bullish trend, and in turn saturating the crypto's buying power. This will eventually fuel FOMO, drawing many buyers into the market and in turn pushing up the price. 

As the market greed increases and trading volumes spike, the markup phase will see high-profile investors begin to sell. This slows the price increases and causes a pullback in the market. As the accumulation phase saw a move from negative to neutral sentiments, the markup phase represents a shift from neutral to bullish to euphoria. 

3. Distribution phase

With the price reaching its peak, the mixture of sellers and buyers send the market into sideways trading. The sentiment is a combination of greed, fear and hope as some believe the market could spontaneously surge again. Typically, the distribution phase is coloured with many bullish price indicators such as head and shoulder trading patterns and double or triple tops, however, the sentiment will eventually shift to a negative space, easily triggered by bad news.

The distribution phase can take place over a short period of time, or last months on end, depending on the number of consolidations, breakouts, and pullbacks and is known to be the phase with the highest levels of volatility. The distribution phase will witness the sentiment turning negative.

4. The markdown phase

The markdown phase is the fourth and final phase in the market cycle and can be the most upsetting for inexperienced traders caught off guard. While some traders might sell at a loss, others maintain their positions looking to leverage a later phase of the next cycle.

The markdown phase sees a decline in price and is a strong indicator that a bottom is approaching. When the price reaches half of its peak value there is generally another mass sell-off, driving the downtrend further into the red. The sentiment is unequivocally negative. 

Example of a crypto market cycle

Looking at the Bitcoin network, many traders believe the cycles revolve around the halvings. Bitcoin halvings are when the miners' rewards for mining a new block are reduced by half, which takes place every 210,000 blocks (roughly every 4 years).

To date, three Bitcoin halvings have taken place, each one instigating a bull run in months to follow. The most recent halving took effect on 11 May 2020, when the BTC price was trading at $8,600. Just 7 months later the price reached $40,000 for the first time in history, setting off a string of all-time high records. To date, the highest Bitcoin price that has been reached is $68,789.63 in November 2021 but went on to lose 40% of its value over the next two months. 

Market cycles are based on the cryptocurrency's overall trading patterns and not on any exchange activity. In a perfect world, the cryptocurrency's trading patterns will reflect the four phases mentioned above in this set order, allowing a set amount of time between transitions.

With time, crypto customers will be able to identify these phases, allowing any individual to build strategies around when to open or close a position, leading to the best trade result. While there is still risk involved, understanding the data surrounding the cyclical nature of trading patterns will assist in getting the best out of a digital asset project.

Crypto supercycles

Crypto supercycles are a unique phenomenon in the blockchain industry. They involve price fluctuations across the entire crypto market, influenced by the increasing adoption of blockchain technology. This concept is more speculative than concrete, lacking well-defined parameters. It revolves around factors like the rise of institutional investors and retail adoption. Opinions vary regarding the existence of the supercycle (notably, Bitcoin's value has surged more than fivefold in a year). This market cycle stands out for its series of all-time highs, with minimal significant or lasting declines. Irrespective of the presence of a crypto supercycle, individuals can consider capitalizing on the market cycle by purchasing Bitcoin during the accumulation phase as prices gain traction after hitting a low point.

For those keen on comprehending crypto trading cycles, it's prudent to formulate a personal strategy for navigating diverse market cycles, as mentioned earlier. Analyzing market trends and patterns has the potential to be rewarding. While some individuals pursue day trading and financial services as a full-time occupation, studying the markets and their behaviors can in some instance also be a profitable part-time pursuit.

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Level up your crypto trading with the right tools. Whether you’re brand new to the industry or a seasoned trader, you can never know enough about the industry, the crypto market or what to expect. Crypto trading is a unique and exciting endeavour, and we’re here to make sure you always have your best foot forward. 

It’s not always easy to know where to start

Being a beginner at anything in life is hard, and the crypto industry is no exception. It’s common for newbies to be inundated with content and it’s not easy to know what’s worth your attention and time and what isn’t. On top of that, there is also a lot of misinformation out there, with publications or platforms selling services through content directed to that purpose.

Through our Crypto Basics platform, you can learn the fundamentals of the crypto industry. We’ve curated the topics to ensure that you get a broad understanding while still covering topics that are relevant to your learning curve. Entering the crypto market should be fun and stimulating, so we’ve geared our Crypto Basics platform as well as all our content toward that.

Start Learning Right From Our Crypto Basics Learning Portal

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Tap crypto basics 101

In our online learning portal, you will have access to plenty of blogs to assist you in gathering all the knowledge you need to know. We’ll start you off with an introduction to the three top cryptocurrencies, explaining what they are, how they came about, and what functions they offer. After the crash course on Bitcoin, Ethereum and Litecoin you’ll have a good idea of what cryptocurrencies are and how they differentiate themselves. You’ll then be introduced to altcoins, a common term used to refer to any cryptocurrency that isn’t Bitcoin.

What is Bitcoin?

What is Ethereum?

What is Litecoin?

What Are Altcoins?

From there you can gain an understanding of how cryptocurrency transactions work and what goes on behind the scenes to facilitate these digital transactions. We’ll also give you an introduction to how mining works, a term used to describe the process of new coins entering the system (also used to verify and process transactions). 

How Do Bitcoin And Altcoin Transactions Work?

What is Bitcoin Mining and How Does it Work?

How Long Will It Take To Mine All The Bitcoins?

In the explanation on Ethereum or across the industry in general, you will likely come across terms like “smart contracts”, “dapps” and “DeFi”. We’ve got you covered with simple explanations on each of these, delivering a comprehensive overview to help you navigate news pieces or forum discussions with confidence. 

What Are Smart Contracts?

What Are Dapps?

What is DeFi?

From there you can explore industry terms like “what is KYC?” as well as take a look at things like market caps and bull versus bear markets. These terms you will hear a lot of in the industry, and these blogs provide you with the terminology to breeze through. 

What is KYC?

What is Market Cap?

What is A Bull Or Bear Market?

Tap into your own potential

This is a good introduction to our Learning Portal, however, there is so much more on offer. As we constantly update the portal be sure to check in when you’re ready for your next dose of crypto knowledge, or better yet bookmark the link so that you constantly are in the know. We regularly update the section with new and insightful material, so be sure to check-in. You’re never too experienced to upgrade your crypto knowledge, so use Tap as your tool kit to further expand your crypto knowledge and navigate the markets with ease. 

With the recent rise in meme tokens and dog-themed coins, any coins with a Shiba Inu (a Japanese breed of dog) mascot seem to attract all the right kinds of attention. With the real Shiba Inu (SHIB) token winning "investment vehicle" of the year in 2021 after posting unbelievable gains, many are still wondering whether Shiba Inu is still a good token?

Where Did It All Begin?

A golden rule of getting in crypto is to understand exactly what you're buying in before taking the plunge. Before we explore Shiba Inu's history, we must start at the beginning with Dogecoin. Dogecoin was the original meme token and entered the crypto scene in 2013. The coin was designed to provide a "light-hearted" alternative to Bitcoin, poking fun at the seriousness of the crypto community at the time with its Shiba Inu logo. 

As it turned out, Dogecoin built a strong and loyal following that has stuck by the coin ever since. It wasn't until 2020 when Tesla CEO Elon Musk became vocal on Twitter about the cryptocurrency that DOGE truly went viral. 

What is Shiba Inu Coin?

Musk's interest in Dogecoin aligned nicely with the launch of Shiba Inu, which officially went live in August 2020. It wasn't long before SHIB climbed the ranks and became the biggest meme token on the market based on market capitalization, albeit for a brief moment. While it was dubbed in comparison as the "Doge Killer", Dogecoin still held the most value. It's worth noting that each time Musk mentioned Dogecoin in writing, Shiba Inu enjoyed some of that success and popularity as displayed by its growth.

Shiba Inu is an ERC-20 token built on the Ethereum platform that powers the Shiba Inu network. The platform features a range of products, from an exchange to an art incubator, and is compatible with a wide range of apps due to its Ethereum based nature. Trading for a fraction of a US cent, Shiba Inu offers a cost-effective way to enter the crypto market. Several businesses have also started accepting the cryptocurrency, allowing customers to pay for sales with SHIB.

How Is Shiba Inu Different From Dogecoin?

A great place to start when trying to understand SHIB is to determine the differences between these two biggest meme tokens. Starting with Dogecoin, the network provides a fast and cheap peer-to-peer payment system that is commonly used for tipping on social media platforms. 

Shiba Inu on the other hand is a little bit more complex. The platform provides a decentralized exchange (DEX) known as ShibaSwap which allows users to earn interest, as well as two other tokens, BONE and LEASH. The project describes itself as an experiment in decentralization. 

Shiba Inu is built on top of the Ethereum protocol, with the tokens created using various token standards, SHIB being an ERC-20 token. This makes it highly compatible with ETH wallets and most DeFi apps, while DOGE requires a specific wallet. These are all reasons as to why investors are calling it the Doge Killer.

Does Shiba Inu (SHIB) Have a Future?

In 2021, Shiba Inu saw gains of 53,241,775%. Investors that bought $2 worth of SHIB on 1 January would have been sitting on millions of dollars worth of returns at the height of the bull run. That's enough to make any digital currency enthusiast look twice. 

So far in 2022, the markets have been predominately down, with Bitcoin and Ethereum falling roughly 35% from their highs in November. Shiba Inu on the other hand has lost around 70% of its value since its all-time high in October 2021. Despite this, it has seen upward swings since, gaining a large amount of value in early February. 

The surge is believed to be contributed to by an Italian fast-food chain called Welly's. Welly's is also Shiba Inu-themed and accepts the cryptocurrency as a form of payment. Two other believed catalysts are the upcoming Shibarium (Shiba Inu's latest blockchain project) designed to reduce transaction fees and the project's vocalized intentions of entering the metaverse. 

Can Shiba Inu Coin Reach $1?

A popular question among crypto afficionados is whether Shiba Inu can reach $1. While there is certainly speculation in the market that this is possible over a substantial period of time, as with any cryptocurrency there is no guarantee on how much money it will be worth in the future. With the price affected by supply and demand economics, there will need to be a considerable amount of hype and demand for the cryptocurrency in order to it to reach that value.

While Shiba Inu could be a promising token should it skyrocket again, it is still considered to be a risky token. The cryptocurrency certainly has an attractive price point and a number of use cases, however, it is also in its early stages as a crypto and is currently less widely accepted when compared to other cryptocurrencies.

As the world waits on authority news regarding the regulatory framework surrounding cryptocurrencies, there are definitive hurdles that need to be reached before the Shiba Inu coin reaches $1, should it do so. There are currently over 545 trillion SHIB in circulation. For your protection, ensure that you never put more funds than you're willing to lose.

How Can I Buy Shiba Inu In The UK?

In love with SHIB or Shiba inus in general? Should you wish to purchase some Shiba Inu (SHIB) with your British pounds (GBP), you can do so easily and securely through the Tap mobile app, from where you can also store the tokens. Tap accepts GBP and supports faster payments for lightning-fast top-ups while allowing users to buy, sell, and engage in a number of cryptocurrency markets and services.

How Can I Buy Shiba Inu In Europe?

In love with SHIB in europe? We got you covered. Should you wish to purchase some Shiba Inu ( SHIB ) with Euros, you can do so with ease and securely through the Tap mobile app, from where you can also store the tokens. Tap accepts Euro and supports SEPA transfers to enable all EU & EEA traders and investors to buy, sell, and engage in a number of cryptocurrency markets and services. 

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In this article, we’re guiding you through the intricacies of the e-money licence: what it means, who needs one and of course, how it affects you, the consumer. This new wave of regulation has been put into place to not only safeguard the consumer but also to put measures in place to identify and stop fraudulent activity. 

What Is Electronic Money (E-money)?

Before we dive into the licencing requirements, let us first take a look at what electronic money is defined as. Essentially, e-money is a digital version of cash. It maintains a monetary value that can be used to make payments and various transactions, typically over the internet, or through a phone or card. 

E-money products are either software-based or hardware-based and are responsible for electronically storing the monetary value. Software-based products are used on computers and tablets and require an internet connection (like PayPal for example) while hardware-based products encompass cards that have a chip card and do not require an online connection (for example, Square). ‍

What Is An E-money Licence? 

The e-money licence is a regulatory licence that authorises an electronic money institution (EMI) to conduct business. EMIs represent the digitisation of financial services and are authorized to issue money as well as provide payment cards, e-wallets, and IBAN accounts. While banks may provide a similar service, they require an alternative licence as they are able to provide a greater range of services.

 In a nutshell, an EMI is considered as such if it engages in the issuing and redeeming of electronic money (e-money), cash withdrawal, deposit and payment services, remittance services, debit or credit transfers, payment initiation and execution services, and account information services. They may conduct these services only if they have the proper licensing.‍

How Does It Protect The Consumer?

While regulation and consumer protection are the driving force behind e-money licences, there are also several other reasons as to why the regulatory framework has been put into place. The licence is designed to provide businesses with the opportunity to gain access to the e-money market, to facilitate innovation in secure e-money services, and to build healthy competition in a secure market. 

E-money licences are obtained to safeguard a consumer’s funds should the EMI become insolvent. This operates in an entirely different manner to a banking licence. Under the proper regulation, EMI’s can choose to do either of the following options to safeguard consumer funds (funds provided by customers in exchange for the issuance of e-money):

• deposit the funds into a segregated client’s funds account with an authorised credit institution, or
• acquire insurance that will cover the risks associated with the client’s funds.

This ensures that the consumer is always protected against loss of funds, and will be compensated accordingly should the situation present itself. It is imperative that consumers only choose EMIs with the correct e-money licences. 

How Much Money Is Protected With The E-Money Licence? 

According to the FCA regulations, the EMI is responsible for establishing the appropriate organisational arrangements to ensure that the safeguarded funds are at all times protected. 

As mentioned above, this can be done by either storing the deposited customer funds in a separate account (different from the institution’s working capital and other funds) or by ensuring that they are covered by an appropriate insurance policy or comparable guarantee. 

While licenced banks work in conjunction with the Financial Services Compensation Scheme (FSCS) and only insure users up to ￡85,000, EMIs are required to protect 100% of the consumers’ funds. 

According to the licence, EMIs are required to safeguard all funds deposited on the platform and not just a portion as per the licence required by the banks. 

While EMIs take several other precautions to protect consumer funds, the e-money licence ensures that the most fundamental legal requirements are met, granting the company the right to legally operate.  

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Whether dissecting crypto or fiat currencies, the foundations remain the same: the currency must serve as a store of value and function as a medium of exchange for goods and services. While both these currency options tick those boxes, cryptocurrencies tend to also be followed by a dark cloud of volatility in the financial sector. 

Market volatility is a natural byproduct of a developing market, however, it can also cause many losses if not managed correctly. When the crypto markets go through high levels of market volatility they tend to get discredited with being a viable payment option. After paying withness to the Bitcoin market swings, several individuals recognised this flaw in the digital currency space and created a solution, "the stablecoin". 

In this article we establish what is a stablecoin is, how it fits into the financial landscape and explore the pros and cons of these digital currencies.

What Is A Stablecoin?

Stablecoins are digital currencies that harness the benefits of being a decentralized, blockchain-operated currency without volatility. Backed by any currency or commodity, stablecoins are pegged to the value of their underlying asset and managed and secured by their relevant platforms. For instance, Tether is pegged to the US dollar while Tether Gold is pegged to the price of gold and Tether EURt is backed by the Euro. 

These currencies operate like any other cryptocurrency, using blockchain technology to maintain and operate the network, but do not fluctuate in value based on supply and demand. Rather the price remains consistent with the asset it is pegged to, providing a better tool for digital payment transactions.

How Do Stablecoins Maintain Their Price?

While we've established that stablecoins are pegged to a commodity and reflect that price, let's cover how exactly that is achieved. Using fiat-backed stablecoins as examples, the companies behind these coins are required to hold a US dollar equivalent for each coin in circulation (or Euro if the stablecoin is pegged to it). 

These funds, also referred to as reserves, are either held in bank accounts or can be a combination of cash and short-term U.S. Treasury bonds. Most of the companies issuing stablecoins conduct third-party audits to prove that their reserves are at the correct levels and release this information to assure users that their coins are always worth $1 (or the currency-backed equivalent). 

Why Have Stablecoins Become so Popular?

The first stablecoin to enter the market was Tether in 2014, pegged to the US dollar. Tether is currently the third-largest cryptocurrency based on market capitalization, illustrating its vast popularity. The second biggest stablecoin currently on the market is USD Coin, also backed by the US dollar, which sits in the top 5 biggest cryptocurrencies with an equally impressive trade volume. Both these coins have provided valuable talking points within the industry as their market caps and adoption increase and they climb the ranks of the biggest cryptocurrencies.

Due to their resistance towards volatility, stablecoins have increased in popularity and are more widely used for conducting business around the world and executing cross border payments.

The Pros Of Stablecoins

Stablecoins are popular options for both businesses and individuals conducting business across borders. Below we outline the top benefits that stablecoins present to the market:

Digital Currency

The obvious first benefit of stablecoins is that they are maintained by blockchain technology and able to conduct international transactions in a much shorter time frame and for less cost than fiat currencies. The fast settlement times make these currencies an excellent, cross-border medium of exchange. They are also easy to use as they operate from wallets in similar ways to traditional cryptocurrencies.

Zero Volatility

Due to the nature of stablecoins being pegged to a fiat currency or commodity, they typically experience little to no high volatility trading periods resulting in a more reliable currency with the benefits of blockchain technology. Pertinent to increasing its adoption.

Hedge Against Failing Markets

Stablecoins have become increasingly popular for traders to hedge against other cryptocurrencies when markets experience a decline in price. Stablecoins allow traders to quickly liquidate their digital assets and easily reenter the market when the price stabilizes. 

The Cons Of Stablecoins

Centralisation

While blockchain technology and cryptocurrencies celebrate the notion of being decentralised, stablecoins do bring in a nature of centralisation, particularly when it comes to the backing of the assets. Ensuring that each coin in circulation is backed by an equal reserve value requires a team that leans the operation more toward a centralized structure.

Transparency

Several stablecoins have been called out publicly for not being transparent with their reserves. Tether, for example, has seen much public outcry concerning whether the company has the correct amount of reserves, leading to fines and regulations imposed by the US government. They have since released a report on the current reserve holdings of the company. 

In Conclusion

Many traders have incorporated stablecoins into their portfolios, to have as a hedge against falling crypto markets or falling fiat markets. These digital assets are also used by businesses around the world to conduct payments with the benefits of digital currencies and without the risk of volatility. Through the Tap app, users can now access and purchase USD Coin (USDC) as well as Tether (USDT). The sleek design of the app interface makes it easy for users who want to buy or sell cryptocurrencies with fiat currency through their phones in a click. 

When it comes to choosing a stablecoin, consider the projects behind it, the liquidity and the ease of use in terms of wallet compatibility.

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Saving and investing are two key elements to managing one's personal wealth. In this article, we explore the benefits and downfalls of both these tools and give you a broader understanding of the topics.

What Does saving entail?

Saving money is an imperative step in building one's wealth and involves putting money away on a consistent basis, consistency is key. These funds are usually kept in an interest-bearing account, allowing the value to increase passively over the years. 

In the United Kingdom, there are different types of ISA (individual savings accounts) that offer tax-free savings options.

In order to save, one must be spending less than they're earning. 

What does investing entail?

Investing involves buying an asset with the intention for it to accumulate in value. This typically comes after saving, although the earlier the better. People invest in the likes of stocks, cryptocurrencies, property and even themselves (education, capital for a business) in the hopes of generating returns. 

What's the difference between saving and investing?

The biggest difference between the two is the varying returns you can earn. Saving money in a bank account typically provides returns of 0.5 - 0.8%, while the return potential on cryptocurrencies and stock is much greater.

The other main difference between saving and investing is the risk. So, while earning higher returns on investments might sound much more appealing, the risk is usually greater. Savings accounts carry minimal risk and are usually insured while investment portfolios will rise and fall with the market and are only insured if the investment company fails. Investors should balance the options and establish which risk level they are comfortable with.

In light of these risks, savings are recommended for short term goals while investments cater better to long term financial objectives. This is because long term investments will ride out the ebb and flow of markets and recover even if there is a drop over a certain period. Savings on the other hand are more easily accessible and won't be "interrupted" if the funds are used for an emergency. 

However, savings are also susceptible to inflation as the interest rates are seldom higher than the inflation rates. For example, if your bank is offering a 0.6% interest on your savings account and inflation rose 2%, your savings would have actually decreased in value. Investing typically beats inflation.

The similarities between savings and investing

As both tools are excellent at building and creating more wealth, there are bound to be similarities between the two.

The main similarity between the two is that both options are best started now, whether you're in them for the long or short term benefits. This is due to compounding. Compounding is the process where the interest you earn on an investment or savings account is continuously reinvested, increasing the base sum each period. 

For example, if you put $1,000 into a compounding savings account and earned 2% interest each year. The next year you will be earning 2% interest on the lump sum plus the interest earned, $1,020. The next year you would earn $1,020.40 ($1,020 interest earned, $20.40). This doesn't sound like too much, but over a ten-year period, you would have amassed $219.20 without having done a thing. 

Before you get started

Before getting started on either of these options, ensure that you have a positive cash flow and are debt-free. You'll also need to establish what your risk tolerance is, your short term and long term financial requirements, and when you would like to access the money.

If you don't have one already, you'll want to establish an Emergency Fund that can cover your living expenses for 3 - 6 months. Should you lose your job you can then fall back on this loan and not have to rely on credit cards with high-interest rates. 

Experts also recommend setting up a retirement fund, with automated monthly contributions. Once your emergency and retirement funds are established, you can consider a short term savings account or long term investment, or both. 

Pros and cons of saving and investing

Below we highlight the pros and cons of both tools:

Saving

Pro: Money is accessible and can easily be withdrawn.

Pro: Exempt from market volatility.

Con: Cannot leverage on market gains (potentially missing out on large compound interest benefits).

Con: Susceptible to inflation.

Investing

Pro: Longer time frames allow for favourable compounding interest.

Pro: Could tap into large market gains. 

Con: Exposed to more risk as markets are susceptible to drops.

Con: May incur a penalty if the money is withdrawn too soon. 

The bottom line

Both savings and investment options carry their own set of risks and rewards and it's ultimately best for you to speak to a financial adviser who is able to provide you with calculated professional advice. 

Disclaimer: This article is intended for communication purposes only, you should not consider any such information, opinions or other material as financial advice. The information herein does not constitute an offer to sell or the solicitation to purchase/invest in any assets and is not to be taken as a recommendation that any particular investment or trading approach is appropriate for any specific person. There is a possibility of risk in investing as investors are exposed to fluctuations in all markets. This communication should be read in conjunction with Tap's Terms and Conditions.

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