—The Market Cycle —
Exploring Topics about Blockchain, Money, Bananas, Business,
& going $MAD in the Modern World~!~
The so called “Blood-Bath” Crypto Bear Market
& what we do now to Navigate these Waves
without Losing Our Shirts… Our Pants …
Or for God’s Sake … the Kitchen Sink
”We are in Hell right now; believe me! Now, we can stay here & get the shit kicked out of us”, said Al Pacino.
“Or…. We can fight our way back, and climb our way out of hell.”
… he continues dropping reality bombs.
Just like in ‘Any Given Sunday’ …
I can’t do it for you …
This content is for informational and educational purposes only, you should NOT construe any such information as legal, tax, investment, financial, or any other advice.
There are many different kinds of risks associated with investing in cryptocurrencies. Investing in crypto, stocks, bonds, exchange traded funds, mutual funds, money market funds, commodities, resources, equities, and securities involve risk of loss.
Loss of principal is possible.
You assume the sole responsibility of evaluating the merits and risks associated, as well as your own financial situation and how it pertains to your choice of indicators on the oscillation of the money before making any financial decisions.
Whether you’re a seasoned investor or you’re brand new to crypto, this article can help you put your emotions aside and see a clear bigger picture based on historical data.
This article will not teach you how to physically trade but instead show you how the historical data can predict where the market is going in terms of all time highs and to help keep you calm in times of uncertainty.
To truly understand what’s going on in the current crypto markets,
& just in general, YOU must grasp 2 Funda-MENTAL key concepts …
The First Concept is the ’Psychology of a Market-Cycle’, which is more Foundational & Funda-MENTAL.
The “Psychological Aspects of the Market Cycle” is as follows:
A) Disbelief — “This rally will fail like the others”
B) Hope — “A recovery is possible”
C) Optimism — “This rally is real”
D) Belief — “Time to get fully invested“
E) Thrill — “I will buy more on margin. Got to tell everyone to buy!”
F) Euphoria — “I am a genius! We’re all going to be rich!”
G) Complacency — “We just need to cool off for the next rally”
H) Anxiety — “Why margin calls? The dip is taking longer than expected”
I) Denial — “My investments are with great companies. They will come back.”
J) Panic — ”Shit! Everyone is selling. I need to get out!”
K) Capitulation — “I’m getting 100% out. I can’t afford to lose more. “
L) Anger — “Who shorted the markets? Why did ‘they’ allow this to happen?”
M) Depression — “How can we pay for all this new stuff? I’m an idiot!“
N) Back to A) → Disbelief — “This is a suckers rally”
& then it starts all over with the Rally turning into the next leg up in the market, commonly called the BULL RUN!!
The ’Psychology of the Market-Cycle’ will forever be a repetitive loop, and will pick up where the last cycle ended.
In 2014–15, after a year-long bear market with prices continuing to free fall, people were too fearful to invest. Since most people are too scared to lose money, they did not see the clear indications that the market was starting to stall and turn around in August of 2015.
Disbelief clouded most people’s judgment and made some miss one of the best investing opportunities in recent cycles. 2016 was the start of the next parabolic bull run; this means that price had yet to return to 2015 prices, and those who missed the rally, well, missed the rally forever (for that period).
While people were stuck in disbelief, the market wasted no time leaving them behind and continued to the next level of the psychology market cycle, aka ‘Hopium’. This is a perfect example of why we use past data to guide us in times of uncertainty.
Women lie, Men lie, NUMBERS DON’T!
It is crucial to know the emotions and feelings you will experience throughout the market cycle and to follow the data, not your feelings. When you can master your emotions you will master the markets!!
Psychology (market cycle) is based on the emotions of Traders, according to the passing of time thru phases of cash flow
…….versus……
Wyckoff (price-action) is based on the numerical values, and the reactions of these changes from the market participants
These two concepts sound very similar but unfortunately one will get you liquidated, and the other one will have you trading stress free with the big banks.
Let’s make 1 thing very clear….. >
’ THE MARKET ’ DOES NOT CARE about YOU or YOUR PEELINGS ~!!~
As discussed above, you need to master your emotional mentality so that you are responding to big market moves in accordance with your trading plan instead of reacting to them emotionally.
The major difference between the two is that data is a driving force for the Wyckoff price action cycle to set the highs and lows of the market. It’s a subtle difference that once you comprehend, it will make the biggest difference in your profitability as a trader or investor.
The Second Concept is based on a technical chart theory, called the “Wyckoff Price Cycle.”
The Wyckoff Method states that the price action cycle consists of 4 phases
1) Accumulation
2) Markup
3) Distribution
4) Mark Down
The Accumulation phase, represented in BLUE, is a sideways market caused by an increasing demand from institutions. Meaning big institutional investors like Black Rock or Gray Scale with trillions of dollars in AUM (assets under management) are starting to buy skillfully and carefully without letting price move too much to the upside. The retail traders, aka the small players, will not understand or realize what’s going on until it’s too late.
The Markup phase, represented in GREEN, is a typical uptrend that follows the Accumulation phase. Sometimes price will retest the previous support highs, giving traders one last opportunity to jump into the market. Retail traders, or the small players, now see the market making higher highs and higher lows. This is fancy talk for traders who see the market moving up. So, they begin to buy, causing prices to continue up higher. Some big institutions will take their profits by selling into buying pressure to ensure their orders are filled, while others wait for a signal of exhaustion before selling.
The Distribution Phase, represented in PURPLE, is where the uptrend, or mark up, eventually loses its momentum and price enters into a sideways range caused by institutional traders selling the rest of their holdings. Unfortunately, the retail traders, at this point, are even still anticipating prices to continue higher; so they keep buying while institutions are starting to execute their short positions. One indication that the market is in a Distribution stage will be the sustained failure of price to create higher bottoms on the chart. The price action creates lower highs which is an indication that the market is currently experiencing a selloff.
The Markdown Phase, represented in RED, is the last stage of the Wyckoff price cycle. The markdown process comes as a downtrend begins after the distribution phase. The institutional traders have gained enough power to push the market down. Retail traders realize the falling prices and close their positions to try to preserve their capital. As retail traders begin to panic across the market, it creates more selling pressure causing prices to fall even further to previous lows or supports. Afterward, this entire process repeats itself by starting from the first stage — the Accumulation process.
The key to the Wyckoff Price Action Cycle is VOLUME.
An accumulation and/or distribution phase is invalid if the VOLUME is below the Moving Average Indicators.
The Wyckoff trading cycle focuses on the psychological perspective of two major groups: the big players (institutional traders) who are assumed to be driving the market, and the general small players (retail traders). The Wyckoff trading cycle is great for analyzing and understanding the Market behavior. In my experience, you cannot just rely upon the Wyckoff cycle; it’s necessary to combine them with solid trading strategies which we will discuss in future articles.
The Technical Analysis to back all this up w/ historical points
Bitcoin has recovered time and time again for 13 years… and counting…
The chart below shows the 1st “BTC CRASH”
After retracing 82%, the price of Bitcoin rallied on a bull run making new ATH (All Time Highs) until April of 2013.
The time period between 2011 and 2013 is called the Mark Up Phase as discussed in the Wyckoff cycle above.
In April 2013, Bitcoin saw another retracement of just over 82%, as illustrated in the screenshot below. I find it weird that the same 82% correction as before happened again; but remember this correction is called the Mark Down Phase.
Bitcoin’s price recovered again from July-August 2013
by making a parabolic move up and making a new ATH.
Sure enough, bitcoin’s price retraced just under 87%.
This is starting to look like a pattern since the same
percent retracement continues to come through… 3 times now to be exact.
Fool me once, shame on you.
Fool me twice, shame on me.
There is no third time because hopefully we now understand this is starting to become a pattern or set up that we can follow and use to predict future price action.
What goes up must come down, right? If you had to guess, what do you think happened next? That’s right! Another 84% correction! Hopefully you’re starting to see the pattern that’s repeating itself over and over again.
A perfect example of the Accumulation Phase is pictured above and is represented by the green box. This particular phase lasted about the whole year of 2015 before transitioning to the Mark Up Phase where price makes another parabolic move upward making the new ATH of 2017.
As we all know, women lie, and men lie (aka the media, social influencers, the government) but numbers do not! The numbers keep telling us that after every bull run or parabolic move up there will be a correction between 82–87%.
Aka MARK DOWN!
The Wyckoff cycle states that once a cycle is complete, it must start over from the beginning at the Accumulation Phase.
As shown above, the green box represents another opportunity to invest during the Accumulation Phase. This particular phase lasted from November 2018 to April 2019. Naturally, the next phase in the Wyckoff cycle is the “Mark Up Phase” where you can see bitcoin’s price making a parabolic move up generating massive profits.
Starting to catch my drift?
After watching the market repeat itself 4 times now, we can only speculate and assume the market will correct itself again between 82–87%. The above chart shows the current market conditions and what an 86% correction would bring price down to.
Yes, you’re reading that correctly! IN MY OPINION we could very well see a retest of the support at $10,000 and potentially lower! Yes, there are other targets above and below $10,000 and I could be 100% WRONG!
One of the “best strategies” to use in times like this is a long-term trading method used by people like Warren Buffet & Michael Saylor called
“Dollar Cost Averaging (DCA)”.
It has been proven statistically to be the most profitable strategy of all.
What is DCA?
It means to invest consistently regardless of price, weekly, monthly, or quarterly, the important thing is you stay consistent….It is impossible to time the tops and bottoms of the markets, so this strategy allows you to accumulate or “Stack Sats”.
In Conclusion:
As long as you can master your emotions throughout the market cycle, continue to DCA at key levels, and recognize the Accumulation or Distribution Phase, you should be successful in the crypto markets.
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