Bitcoin (BTC) Price in Relation to Wall Street Cheat Sheet’s Psychology of a Market Cycle
Bitcoin [BTC] has suffered immensely over most of 2018, as it has at some point dropped as low as the USD$3,000 ranges. This is surely to surprise many considering the immense growth witnessed towards the end of 2017. Is there a possible relationship between the two events? Can we predict what’s to come moving forward? While the latter question has been a tough on to decipher, a recent Coin Desk report trusts that the bitcoin market can be predicted using Wall Street’s Psychology of a Market Cycle, i.e. through the different stages of emotion as we move across the market.
According to the report, what we witnessed back towards the end of 2017 reflects, “euphoria”, which has been defined as, “I am a genius! We’re all going to be rich!” This emotion is the highest peak before things go downhill. In particular, investors typically indicate euphoria as being the peak of risk. It has also been revealed that discussion on potential futures stemmed towards the end of 2017, which led many to invest into bitcoin.
Where on the Psychology of a Market Cycle does the bitcoin market sit? As per Coin Desk, “complacency” or “we just need to cool off for the next rally” has been long gone – with “anxiety”, “denial” and “panic” setting in. Since Bitcoin witnessed USD$3000 ranges sometime November 2018, it has been argued that we’ve also witnessed panic.
All this being said, it is deemed that the “capitulation” or “exiting the market” stage has yet to come considering the fact that after every dip in prices some recovery (even the slightest) has been present. The problem starts to set in for the crypto market the moment we move down the cycle to “anger”, “depression” and “disbelief”, which is clearly nearing for bitcoin, but this could also mean good things, as it implies a restart to the cycle.