Psychology of a Market Cycle Applied (ADA Application)
Above is a side by side comparison of the Psychology of the market cycle from Wall St. Cheat Sheet to ADA's current yearly market structure. I overlayed colored lines over line graph for visual aid. This market cycle theory developed in the lens of trading psychology was originally developed and posted by Satoshi Nakamoto, the cryptic father of the first cryptocurrency, Bitcoin , and, arguably, deserves the title of 'Father of Cryptocurrency' alongside David Chaum .
Currently, I see two possibilities:
1) We are in the end of the DISBELIEF phase, where a slight pull back occurs before the optimism/belief/thrill stages appear.
2) We may be experiencing the depression dip before building up to the "Hope" phase were a small pull back occurs before a big breakout.
Given the effects of the tumultuous socio-economic environment created by COVID along with the unprecedented flooding of the Alt/DeFi/NFT market (ranging from both revolutionary blockchain technologies to almost useless meme coins like Shib or the SQUID, named as reference to Squid Games show). It would be remiss of me not to further mention the major effects the global political environment has rendered. Issues range from China's crypto collapse (starting with mining and then finally fully banning the use of them) to Kazakhstan's power and internet outages .
Together, these provide an answer to a concept that seems to escape even the most astute technical traders: Although the use of statistically oriented indicators proves effective in theory, the patterns and signals we know to be effective tools today will slowly change in the the way they provide signals for traders. If the picture was the "average," then the actual market provides the source of "standard deviations" we see in price action evolution, both within a single asset's historical rendering and between assets that move closely.
Currently, I see two possibilities:
1) We are in the end of the DISBELIEF phase, where a slight pull back occurs before the optimism/belief/thrill stages appear.
2) We may be experiencing the depression dip before building up to the "Hope" phase were a small pull back occurs before a big breakout.
Given the effects of the tumultuous socio-economic environment created by COVID along with the unprecedented flooding of the Alt/DeFi/NFT market (ranging from both revolutionary blockchain technologies to almost useless meme coins like Shib or the SQUID, named as reference to Squid Games show). It would be remiss of me not to further mention the major effects the global political environment has rendered. Issues range from China's crypto collapse (starting with mining and then finally fully banning the use of them) to Kazakhstan's power and internet outages .
Together, these provide an answer to a concept that seems to escape even the most astute technical traders: Although the use of statistically oriented indicators proves effective in theory, the patterns and signals we know to be effective tools today will slowly change in the the way they provide signals for traders. If the picture was the "average," then the actual market provides the source of "standard deviations" we see in price action evolution, both within a single asset's historical rendering and between assets that move closely.
Comment:
Based on current price action, it seems to be confirmed we are in the growing up stage of the cycle moving into optimism soon. Happy trading.