Is The End of Crypto Panic close? Analysts Believe It

Is the cryptocurrency world dominated by the same psychological factors that rule other markets like equities, forex or futures? Analysts at Coindesk believe that. Fear and greed.

As in real estate it is all about location, location, and location when it comes to investments, it is all about psychology, psychology, and psychology.

In the crypto world, it seems similar as CoinDesk analysts Sebastian Sinclair, Sam Ouimet, and Omkar Godbole commented in a recent report about what a Wall Street chart may tell us about Bitcoin Price.

Godbole, Sinclair, and Quimet are using the “Wall Street Cheat Sheet” chart applied to Bitcoin price movement in the last years. Going from disbelief to euphoria, then complacency to denial, anger and depression, to then re-start the cycle with disbelief, it is all about the psychology market cycle.

As we all know, the cryptocurrency market was fueled by euphoria between October and December 2017, when bitcoin prices rose from $6,000 to $20,000 in just seven weeks of speculation. BTC/USD rose over 1,000% in 2017.

By January, “most pundits came out with bitcoin targets of $50,000 or more at the time,” said the report. “The bubble, however, was pricked just two weeks into January by a regulatory crackdown in China and South Korea – two of the biggest sources of demand for cryptocurrencies back then.”

Complacency, anxiety and denial

Then, the Bitcoin market went into a weak chart that made investors gone through “complacency,” “anxiety” and “denial.”

“The denial stage,” says the report, “lasted for five months as BTC’s repeated defence of $6,000 offered hope that the broader market and altcoins with strong fundamentals would recover lost ground before the year-end.”

However, hopes were destroyed once the Bitcoin broke below the $6,000 on November 14 when Bitcoin Cash had its hard fork and sending the market into the panic mode.

The panic mode was confirmed by the 50% sell-off from $6,000 to $3,300 in just two weeks and the 30% increase of trading volume between October and November. “That high-volume sell-off likely indicates many weaker hands have left the market,” says the analysis.

So it is where BTC is right now, according to the analysts, Bitcoin market is in panic but not yet in capitulation, “at least until a break below the psychological price level of $3,000 incites capitulation.”

Once the market enters into capitulation, the movement will be violent to the downside, but also an increase in volume from buyers. Then, a period of sideways and anger, misery and depression for investors.

However, then, the miracle happens, “when all hope in the market is lost in the eyes of the public, the market quietly starts to pick up a bid.” However, investors will no believe any rally.

And here is where wild things happen. The disbelief starts against and with it, the psychology of a market cycle.

Finally, analysts remember what Billionaire Warren Buffett once said, be “fearful when others are greedy and greedy when others are fearful.”