What is Crypto Capitulation? 

Crypto market cycles have been occurring around every 4 years. Can be more, can be less. 

In a market cycle, we have two main phases: 

Bull: prices rise + hit the peak / all time high (ATH) 

Bear: prices fall + reach the bottom / all time low (ATL) 

Capitulation occurs when prices fall. They vary in duration and intensity. 

Think of them as: 

1) Long-Term 

2) Medium-Term 

3) Short-Term 

♦Long-term 

Happens when prices reach an ATL during extreme risk, panic, & FUD. 

The big capitulation occurred during the pandemic back in 2020, right before the bull run of 2021. 

This is considered the best time for a long-term investor to buy and prepare for the next bull cycle. 

So far, this cycle’s big capitulation seems to be the FTX collapse on Nov 22. If that’s true, then the prices are discounted until the next bull run, expected by 2024–25. 

♦Medium-Term Crypto Capitulation 

It may occur 2–3 times in a cycle. Not the lowest. 

The best example happened in 2021 when BTC’s price fell from $64K to $28K then up to $69K. 

The latest example was in March 2023 when USDC depegged causing the price to fall from 25k to 19k and then up violently to 31k. 

Best suited for swing traders who don’t mind waiting several months. 

It’s an excellent point for long-term investors to dollar cost average or DCA. 

If BTC dips sub 15k, then the FTX collapse was a mid-term capitulation. 

♦Short-Term Crypto Capitulation 

Also called the local bottom or dip, and it’s redundant. 

Traders take advantage by buying the dip, hoping for a price rebound. 

A good example occurred past Jan-Feb when BTC’s price fell to 21k and rebounded to 25k. 

Another example is when traders use short-term FUD to buy. Or all the panic caused by FOMC meetings. 

Using Japanese candlesticks, you could spot them on smaller timeframes, maximum 4-hour candles. 

Best suited for day traders and swing traders who wait around 2 weeks. 

Not great for investors or medium-term swing traders. 

To best use capitulation, you have to ask yourself: 

1. What’s your capital size? 

2. Total capital owned? 

3. Taking profits in the short, medium, or long term? 

4. Are you a trader or an investor? 

5. How much risk/loss can you take? 

6. How much time can you handle with open positions? More than a year? 

7. Are you emotional over your money that a slight downturn is unbearable? 

8. How much time do you have to practice trading? No free time? 

If you have a small capital size or can’t bear losses, waiting for the big capitulation might be the best for you. 

If you can’t sleep due to open positions, day trading and short-term capitulation are best for you. 

These answers will help you determine your goals and strategy. 

Economists’ best advice: drops are a motive for buying and not selling! 

Don’t FOMO by chasing green candles. Chase red ones.