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- The Wall Street Cheat Sheet is a good guide for tracking typical market sentiment
- The chart tracks the emotions people typically proceed through during a secured asset market cycle
- Where does crypto sit nine months following the $69,000 top?
The Wall Street Cheat Sheet is an extremely handy indicator regarding the good and the bad of typical market sentiment during a secured asset cycle. It had been created in 2014 by Damien Hoffman and charts the emotions that a lot of traders and asset holders proceed through during bull and bear markets, and is really a particular favourite with the largely amateur crypto crowd. With the most recent Bitcoin top of $69,000 having been established nine months ago, where do we currently take a seat on the Wall Street Cheat Sheet and so what can we expect from here?
The Wall Street Cheat Sheet is eerily accurate in forecasting investor bias at times throughout a market cycle:
The wonder of the crypto market is that the whole lot is moving so rapidly that you could have the emotions differ from one stage to another almost overnight, rendering it a perfect research study. Lets compare the chart to price action since November 2021 and see if we are able to create a correlation:
Its not perfect nonetheless it fits pretty much, especially with the panic and capitulation felt within the last months. We are able to say confidently then that people are either going right through or, much more likely, are going to proceed through, the Anger phase, where in fact the rally off underneath dies a death and prices stagnate and get gradually worse and worse. For Bitcoin this may mean a go back to $14,000 to properly flush out people that have any hope left.
Depression is Optimism
Needless to say, an optimist might claim that the anger phase has recently gone and that is depression, however the cycle hasnt played out long enough yet, which we are able to see if we compare to 2018-2019:
Once we can see, there’s still a while to go before we are able to see through anger and in to the depression phase. In the end, with some NFTs still worth six figures, the marketplace still has a lot of correcting left to accomplish.