Understanding Market Cycles (The Emotional Rollercoaster!)

 MARKET CYCLES

This part is especially for anyone feeling the need to buy cryptos as soon as possible. 

I’m adding this bit here from my advanced guide because it’s highly important that anyone “needing to buy right now!” understand what a Market Cycle is first. 

WHAT GOES UP MUST COME DOWN. 

I want to make this as clear as possible: Markets must take a breather, especially after going up too high too fast (as in parabolic moves) or just moving relatively up and up for a long stretch of time. 

If you don’t think the price will go down again, think again. Maybe not quite as low, maybe lower. But it will follow a “market cycle” of sorts.

MARKETS GO UP AND DOWN. 

Be patient and calm. Do not worry about missing out.

THERE ARE ALWAYS GOOD BUYING OPPORTUNITIES. 

Let the market come to you.

This well-known Market Cycle chart is truer than you may think. Find it online. Print it out. Never forget it.

Here is an even simpler version:

You tell a newcomer that bitcoin went up 3K in one day and they suddenly get interested. This is the “dumb money” herd mentality most, including me, started out with: wanting in after an asset has already risen because they think it will go up more and more and more (forever??). They aren't interested when it is not "exciting".

It is very hard to patiently wait for the market to come back down. Of course it may keep going up, but probably not for some time (after a big move, it needs to rest and stabilize). 

The newcomers don’t know market cycles. The “smart money” investors know this and take advantage of it. Another reason I do not recommend trading these markets. 

When it dips, newbies suddenly get scared and want to sell. But don’t you want to buy cheap? Then we have to buy when it’s down, right? 

But the emotions on the market cycle chart when it goes down are fear, panic, anger… who wants to buy more of an asset you’re upset with? Oh, the regret! Let’s just forget it all!

The smart money operates the exact opposite of whatever emotions the market cycle is bringing on. They are wisened up to market cycles. They will happily buy up the cryptos from the panicking herd. 

As the Wall Street saying goes, “Buy when others are fearful…” 

CRYPTO FEAR & GREED INDEX: https://alternative.me/crypto/fear-and-greed-index/

The crypto market behavior is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). 

Also, people often sell their coins in irrational reaction of seeing red numbers. With the Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions:

• Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.

• When Investors are getting too greedy, that means the market is due for a correction.

I do NOT buy when the sentiment is “greedy” and prices are up up up 25% in one day.

I think the best time to buy is when the fear level hits around 20, with 18 being ideal. I’d buy around 25 or higher too, it doesn’t matter so much in the overall scheme of things.

Often I just buy at whatever price! I am buying for the future, not next month. Nobody can predict markets, or we’d all be rich.

It may dip further. Just ride it out. Part of the game!

Some big holders can even manipulate smaller markets such as this (not forever!), selling their own stash and dropping the price just to generate further sells from the newbies who rush in to sell as soon as they see the price dropping (oh no! fear!). The big “whales” will then buy up the “guppies” coins at a discount. Well, you’re wisened up to the game!

They love to apply the Wall Street saying and “buy when blood is in the streets, even if it’s your own.” The BIG drops are the time of maximum financial opportunity, they know. 

However, it’s not so important to try to “time the bottom” of a market. Nobody can exactly. Hindsight is 20/20. It’s more clear when you can look back on it, and therefore people tend to judge themselves too harshly. It’s okay! Nobody can predict a market exactly. Go easy on yourself.

I believe it’s enough just to know the overall trend of an asset and zoom out to look at the larger view. Perspective is everything. I’d buy bitcoin at any price up to 14K, even 20K, if my perspective saw it hitting around 100K in time. See what I mean? 

Whether you buy bitcoin at 8K or 14K, if you have done some homework and believe it will go to 50K or 100K within the next two years, you just buy in and relax about it. Who cares if it goes from 12K where you bought it down to 9K? Who cares what the news says? You have unshakeable confidence. It’s stats are still great. It’s still growing in usage. You smile at the lower price and buy a bit more (I don’t go ‘all in’ in one day, but buy in smaller chunks over time). 

I know people who have endured much worse price drop scenarios for a long time.

Don’t let NOT understanding market cycles scare you out of holding a worthwhile asset!

Now print out that chart! ;-)