There exists a schematic depicting the psychology driving the different stages of a market cycle, and it often gets shared in response to the current sentiment in Bitcoin markets.
According to the “,” investors in the first-ever cryptocurrency could be in denial and will be caught off guard if Bitcoin falls significantly lower from here.Where Is Bitcoin In The Current Market Cycle, According to Famous Cheat Sheet
All financial markets are cyclical, and it’s no different for Bitcoin and other crypto assets. After periods of extreme or sustained growth, often comes a retracement of a similar magnitude.
Related Reading | Elliott Wave Theory Suggests Bitcoin May Be Due For Biggest Correction Yet
With Bitcoin, capitulation occurred in November 2018 when support at $6,000 broke down and the leading crypto asset by market cap fell 50% to $3,000 at its final low. Despair permeated the crypto industry, and companies began reducing headcount to prevent bankruptcy.
Except Bitcoin was rejected at $14,000 – before it could set a new high – and is already in a downtrend once again.
But because Bitcoin has already “bottomed,” investors are confused about where the leading cryptocurrency by market cap is in the current market cycle.Wonder how many of the people who laughed at my echo bubble chart in August are still laughing… — A Voice of Reason in a Sea of Insanity (@sometrader78)
The confusion may stem from the recent “textbook echo bubble” popping – a fractal showing similarities to the initial 2017 crypto hype bubble. Because this cycle is merely a mini-cycle mimicking the prior bubble cycle, it makes it difficult to understand exactly where we are in said cycle.
Related Reading | Former IMF Economist: Current Bitcoin Trend is “Textbook Echo Bubble”
If Bitcoin price continues to fall, it’ll be clear that the market is currently in a state of denial once again, and another round of capitulation could be next for the crypto market. Until that happens, though, and prices begin to rise steadily once again, there will always be those in denial holding out hope that we’re elsewhere in the market cycle.
