In the financial market in general and especially the stock market, the market sentiment chart is very widely used. A market cycle often begins to be skeptical of growth and decline. Let's take a look at investor sentiment at each market stage in the Bitcoin and crypto markets.
At the end of the previous cycle, after a long-term bear market, the market started to grow. At this stage, investor sentiment begins to be skeptical about the market's signs of re-growth. Many people call this period of slight growth spurious growth and do not believe the market can rise again.
As in the past 2 years, Bitcoin gradually increased to the levels of 7,000, 8000,...,10,000 USD but then pulled down again.
After Bitcoin started to recover and had mild rallies, investors began to have hope in the market. Investors are starting to believe that the market will recover, but this confidence is not certain. During this period, the market price begins to have stronger growth spurts, corrects and continues to grow.
After the correction, the market continued to grow for a longer time. There is still some doubt about growth at this stage. This phase is like when BTC broke through the old peak of $20,000. Investors are starting to believe in the growth cycle again but are still skeptical.
A little skepticism of investors will be convinced when the market continuously grows and makes new highs. Now that the bull cycle has really arrived, market players are just focusing on investing and looking to invest more in the market.
As the price continued to increase, the investor had a certain return on his investment. The higher the price, the more excited they are, not only do they invest, but they also introduce relatives and friends to invest in this market. This is also the time when a lot of new investors rushed into the market, the media channels also reported a lot about the market, attracting more investors.
When many investors rushed to buy, the market reached a very high price. Prices from optimism to euphoria increased continuously and there were very few corrections. Therefore, at this stage, most of the investors' previous investments are profitable and investing in any code is profitable. At this time, many people still continue to buy more and continue to invest and think that they are good and the investment is profitable. This phase is the peak of the growth spurt.
When investors see the market begin to correct down but still arrogantly believe in the previous investment. And the adjusted price is believed by investors that the price corrects to continue to increase further and continue to buy more.
At this time, the price continues to go down, not continue to increase after the correction. At this time, a lot of margin and future orders were liquidated because the price kept going down more than expected. While the market is still receiving a lot of good news at the moment, once it is in a downtrend, the price will continue to go down.
At this stage, investors have not yet accepted that the market has peaked and started to decline. They still think that the projects they invest in have great potential and will continue to grow.
Prices continued to fall, and those who still kept their portfolios began to panic. Most of the people who bought at the high price up to this point would panic and sell their investment at a loss if it was still holding.
The last holders after the panic still see the price go down and a lot of sellers will sell all their investments and can't hold any more.
Those who continue to hold without selling will go into indignation and disapproval. They will continue to ask questions like why are there still sellers at low prices? Lots of good news but the market is still going down? or why doesn't the government ban market manipulation?...
In early 2018 after the market's deep price drop, Thuan received a lot of comments on posts in his videos expressing anger, criticizing the market when prices were falling. This is when the price has bottomed out.
When the market price has bottomed and continues to move sideways at this level, it will make the last people in the market depressed and no longer have hope with the market. And this is also the final stage of the old market cycle and the beginning of a new one.
Going through the phases of the market cycle above will help newcomers better understand the stages of the market as well as the development of psychology in the market. When you go through it and look back, you will also see how your psychology was in each stage.
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