To succeed in crypto, you need to understand market psychology.
Here is your crash course to mastering Market Cycles.
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Here is your crash course to mastering Market Cycles.
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1/ Market Cycles are a simple framework to make sense of common market patterns. People have different terms ways to explain market cycles but in Wyckoff's method, you have
- Accumulation
- Mark up
- Distribution
- Mark down
- Accumulation
- Mark up
- Distribution
- Mark down
2/ Accumulation
Markets pump when there is increased perceived value of an asset. This happens when there is some development that could lead to new buyers.
The theory is that large players want to buy an asset without moving the markets. Therefore, price stays in a range.
Markets pump when there is increased perceived value of an asset. This happens when there is some development that could lead to new buyers.
The theory is that large players want to buy an asset without moving the markets. Therefore, price stays in a range.
3/ Using the BTC ETF as an example, people bought into the upcoming news because
- The ETF news could bring in new institutional money to BTC.
- A spot ETF listing would bring more legitimacy to Crypto as an alternative asset class.
- The ETF news could bring in new institutional money to BTC.
- A spot ETF listing would bring more legitimacy to Crypto as an alternative asset class.
4/ The main word here is "could." There are no guarantees that this could actually but it doesn't matter as long as the speculative value was there.
The more bullish the market is, the more leeway there is for speculation.
The more bullish the market is, the more leeway there is for speculation.
5/ Mark up
Once accumulation is finished, you may see a breakout above the accumulation zone, which could be a signal for the mark up.
More people start to take notice as price goes up. New buyers enter over fear of missing out.
Once accumulation is finished, you may see a breakout above the accumulation zone, which could be a signal for the mark up.
More people start to take notice as price goes up. New buyers enter over fear of missing out.
6/ The key hints at a sustained uptrend area
- Dips are shallow and eaten up fast.
- People stay in denial and think this must be a fake out until it's too late.
- The chart is forming higher highs and higher lows.
- Dips are shallow and eaten up fast.
- People stay in denial and think this must be a fake out until it's too late.
- The chart is forming higher highs and higher lows.
7/ When you see consolidation after the mark up, this is prime time for alts to shine. Since early buyers are now "richer," there is more liquidity in the markets which means more money to throw into new alt narratives.
8/ Distribution
Once price pumps to a certain point, there will be an equilibrium set between buyers and sellers. This is where consolidation or retracements tend to occur.
Once price pumps to a certain point, there will be an equilibrium set between buyers and sellers. This is where consolidation or retracements tend to occur.
9/ Now that early buyers are "richer," greed tells us that people will take the profit and potentially roll it in to other assets that haven't pumped as much. This is usually what leads to the infamous altcoin rallies.
10/ Eventually the music stops. Some FUD comes out. There are some pumps here and there but the trend is down. People are PVP on alts and memecoins and the tower topples over.
People get scared. Late buyers panic because they are losing money which leads to a cascade of selling.
People get scared. Late buyers panic because they are losing money which leads to a cascade of selling.
11/ Eventually the selling is no longer rational. People are calling for price to go lower but BTC starts a new accumulation phase.
This is where the best opportunity, but it's hard to buy because everyone will tell you otherwise. Cut out the noise and look at the stats.
This is where the best opportunity, but it's hard to buy because everyone will tell you otherwise. Cut out the noise and look at the stats.
12/ You can spot good accumulation signals with basic fib levels. 0.618 is know as the golden pocket and 0.786 is usually known as a good accumulation zone.
You can draw fibs for the historical chart or you can draw them from the cycle low to high for retracements.
You can draw fibs for the historical chart or you can draw them from the cycle low to high for retracements.
13/ With that said, markets are not predictable. Instead of viewing this as a rigid structure, adapting this into a mental framework can help you spot when the odds are in your favor.
When the trend is in your favor, profits multiply and trading losses become smaller.
When the trend is in your favor, profits multiply and trading losses become smaller.
14/ As a whole, the best periods to pay attention are
- When an asset is below its fair value due to irrational selling
- when there is momentum in the early stages of an uptrend
- when liquidity enters a new narrative.
- When an asset is below its fair value due to irrational selling
- when there is momentum in the early stages of an uptrend
- when liquidity enters a new narrative.
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This thread is for entertainment purposes only. Not Financial Advice.
This thread is for entertainment purposes only. Not Financial Advice.
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