Jun 06, · The Psychology of a Market Cycle. As a nascent market with few real fundamentals, the cryptocurrency market is driven primarily by sentiment — human emotions. Feelings—from deep depression to euphoric mania — compel traders to buy and sell assets in an emotional cycle. Moving average and moving average multiples to pick market cycle highs to within 3 days. The Golden Ratio Multiplier Uses Bitcoin's growth adoption curve and market cycles to identify both intracycle and full-cycle price highs. Dec 05, · The above chart shows bitcoin has had 3 cycles so far, with the 3rd one ending in December when bitcoin bottomed at $3, Cycle 4’s projected length is said to be about days, considering the elapsed days, there are still days until the next cycle cryptocoin365.de: Akash Girimath.
Market cycle bitcoinThis Macro Market Cycle Analysis Shows Bitcoin Will Soon Resume Uptrend
People tend to use historical market data to deduce trends and extrapolate that data into potential future trends. Though historical price action can be useful in predicting future trend reversals, no market cycle will ever be a copy-paste version of itself.
Every market cycle is and will be different. Every uptrend will yield different gains; every correction will vary in its severity. This would constitute an additional 1. For Bitcoin to match its deepest retrace to date i. What never changes are the fundamental shifts in human psychology that underpin market cycles. Humans are predictably irrational.
At some point, the bargain hunters are going to start stepping into the cryptocurrency market by buying Bitcoin and other alternative coins i.
Author of the Rekt Capital Newsletter. Try Paperform For Free. The resistance level is where the coin stabilizes. If the demand keeps on, then the value shoots further. Past this level, it won't slow until the peak. One of the memorable Bitcoin market cycles followed the halving. The coin took a growth pattern to hit some of the highest. Bitcoin went on a downward spiral after the bull run.
Most people attribute the drop to the effects of the coronavirus pandemic. Yet, it is still part of the market. The cycle takes into account all the external factors likely to impact the coin. Whatever happens, the coin must keep its shape through the cycle. Still, these are the earlier days after the May halving. Buying Bitcoin from one halving, then selling at the other, is profitable. The next halving of the coin always starts at higher values than the previous one.
Anyone who doesn't want to go through the cycle can use that. While halving is the moving force behind the cycle, it won't last forever. Bitcoin has a supply limit of 21 million. Currently, around Meaning there comes a time halving won't happen again. For now, it is some years away. It would be at some stage around Most projections show that Bitcoin would have stabilized by then.
The more the mining reward goes down, the less lucrative it becomes. Miners, however, are essential for the security of the blockchain. They verify every transaction to avoid fraud. To continue working on the blockchain, the traders will find other rewards. The most probable is the transaction fees. With miners relying on fees, there would be no curated reduction of supply. The bitcoin market cycle would be like fiat currencies.
Disbelief — Disbelief is the first stage after the total decline of a market. With no emotions left, traders don't imagine the market can bounce back.
Most are designed to fate after losing investments. Hope — after some time of extended growth, the traders open up to an upturn. They start believing in an oncoming bull-run. They are, however, still not willing to go big. Optimism — sustained market rise for months increases the trader's trust. They start investing more comfortably on the asset. The asset attracts several investors leading to immense capital.
Belief — the traders start accepting the possibility of a bull run. The market expands as investors seek new opportunities. Thrill — at this point, the traders are entirely invested in the asset. The bull run has stayed for some time, and it looks like nothing can go wrong. This is the best time to look for alternative investments. However, most traders don't expect anything to go wrong.
Euphoria — the sustained bull run is reaching its peak. This is the point where everyone wants a piece of the asset. The press is getting worked up just like other investors. It is where most money gets into the cycle.
Some people would even leave other assets to get to this. Complacency — the first signs of a stop in the bull run shows. Most traders, however, are too invested to believe any other possibility except a rise. They end up assuming that it is a slow run before the rise gets back to normal. Anxiety — this is the point when the realization that at some point, prices will go down. A small downturn on the value marks it. However, traders are not letting go.
They can hold on as the reductions are on a low scale. Denial — the traders have already sensed the effects of the downturn. The assets are dropping rapidly. The traders are, however, still hoping for a market correction. They tend to believe they cannot be on the wrong side of the market. Panic — after denying the market situation for someone, the traders suddenly open up to reality.
The bear run is the reality, and losses are unavoidable. The traders don't want to lose everything. They end up selling out of fear. Capitulation — not everyone sells at panic. Some tend to believe the market can still salvage. After some time, they realize they lose a lot while holding the coins for longer. They sell, thinking its now a free fall.
Depression — at this point, the traders don't care about the markets anymore. They have lost all hopes in the markets. However, it is also the point the market starts to rebuild to start from stage 1. The Depression stage might last for an extended period. The whole system can be summarized in short as accumulation, greed, distribution, fear, repeat. The duration of the cycles is not any important. Whether it runs for weeks, months, or several years, the cycle remains the same.
Bitcoin currently seems to be on the belief market cycle stage. Most traders didn't imagine it would run against the falling traditional economy. After a sustained value increase, they started hoping it beats the slump.