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Market Cycles: How to Overcome the Fear of Missing Out (FOMO)
In this post, I'll be providing an educational post on the cryptocurrency's market cycle, and how to overcome the fear of missing out, also known as fomo.
It's important to understand that the cryptocurrency market has very clear market cycles.
In order to profit in the cryptocurrency market, it's important to think like a whale.
1. To begin with, whales keep their assets in the form of fiat, or tether (USDT) before the beginning of a market cycle
2. Whales buy Bitcoin with their cash at hand, and this is when we see Bitcoin rally alone
3. Since Bitcoin is the only cryptocurrency to rally, Bitcoin dominance soars up along with Bitcoin's price
4. However, the market trend soon changes as the whales, who have profited from Bitcoin, move onto large cap altcoins
5. These are our typical altcoins at the top 20 in terms of market cap
6. After these coins rally, capital then flows into the undervalued coins with a much smaller market cap
7. Because there isn't enough liquidity, these less popular coins tend to break out the hardest, and demonstrate immense risk
8. After whales profit from small cap alts, it's time to convert their assets back to Bitcoin
9. This process is repeated during a bull run, and ultimately converted to fiat in a bear trend.
So, what are we currently seeing in the market today?
Bitcoin
- For Bitcoin, we are seeing a textbook bearish divergence
- In my previous analysis, I have provided consistent updates, in which the divergences I have spotted, both bullish and bearish, have played out perfectly.
- You can check the previous analysis above.
- As such, it's reasonable to expect this divergence on the longer time frame to play out as well
- The higher highs on the price, and lower highs on the Relative Strength Index (RSI) is extremely concerning
- The Moving Average Convergence Divergence (MACD) also demonstrates decreasing bullish histograms, with a potential death cross in play
Does that mean we have missed the train?
While Bitcoin may be done for the short term (since the uptrend is still intact, and we are seeing higher lows and higher highs on the longer time frames), but there are opportunities to be spotted in the cryptocurrency market.
Ethereum
- Ethereum has been consolidating for a while on the weekly, and has been inactive on the daily
- The Ethereum 2.0 Countdown just recently began, providing bullish stimulus for prices
- Based on the market cycle theory explained above, Bitcoin's short term bearish signals suggests an opportunity for Ethereum to break out
- Considering that Bitcoin dominance is trading within a downtrend over the long term, we could expect price action from Ethereum in the coming days
- For my analysis on ETH's long term price action, check my previous analysis below:
Conclusion
In summary, seeing everyone else make money while you sit on a pile of cash, might be frustrating mentally. But as I always emphasize, trading is a psychological game. Successful traders have a good understanding of the market psychology and cycles. As such, capitalizing on trading opportunities require a combination of proper knowledge and patience. There will always be opportunities, regardless of the market situation, as beauty is in the eye of the beholder.
It's important to understand that the cryptocurrency market has very clear market cycles.
In order to profit in the cryptocurrency market, it's important to think like a whale.
1. To begin with, whales keep their assets in the form of fiat, or tether (USDT) before the beginning of a market cycle
2. Whales buy Bitcoin with their cash at hand, and this is when we see Bitcoin rally alone
3. Since Bitcoin is the only cryptocurrency to rally, Bitcoin dominance soars up along with Bitcoin's price
4. However, the market trend soon changes as the whales, who have profited from Bitcoin, move onto large cap altcoins
5. These are our typical altcoins at the top 20 in terms of market cap
6. After these coins rally, capital then flows into the undervalued coins with a much smaller market cap
7. Because there isn't enough liquidity, these less popular coins tend to break out the hardest, and demonstrate immense risk
8. After whales profit from small cap alts, it's time to convert their assets back to Bitcoin
9. This process is repeated during a bull run, and ultimately converted to fiat in a bear trend.
So, what are we currently seeing in the market today?
Bitcoin
- For Bitcoin, we are seeing a textbook bearish divergence
- In my previous analysis, I have provided consistent updates, in which the divergences I have spotted, both bullish and bearish, have played out perfectly.
- You can check the previous analysis above.
- As such, it's reasonable to expect this divergence on the longer time frame to play out as well
- The higher highs on the price, and lower highs on the Relative Strength Index (RSI) is extremely concerning
- The Moving Average Convergence Divergence (MACD) also demonstrates decreasing bullish histograms, with a potential death cross in play
Does that mean we have missed the train?
While Bitcoin may be done for the short term (since the uptrend is still intact, and we are seeing higher lows and higher highs on the longer time frames), but there are opportunities to be spotted in the cryptocurrency market.
Ethereum
- Ethereum has been consolidating for a while on the weekly, and has been inactive on the daily
- The Ethereum 2.0 Countdown just recently began, providing bullish stimulus for prices
- Based on the market cycle theory explained above, Bitcoin's short term bearish signals suggests an opportunity for Ethereum to break out
- Considering that Bitcoin dominance is trading within a downtrend over the long term, we could expect price action from Ethereum in the coming days
- For my analysis on ETH's long term price action, check my previous analysis below:
Conclusion
In summary, seeing everyone else make money while you sit on a pile of cash, might be frustrating mentally. But as I always emphasize, trading is a psychological game. Successful traders have a good understanding of the market psychology and cycles. As such, capitalizing on trading opportunities require a combination of proper knowledge and patience. There will always be opportunities, regardless of the market situation, as beauty is in the eye of the beholder.
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