The Correlation Between Bitcoin and Altcoins From the Cycle Theory in Greenspan's Market
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1. Market background
So, why is there such an interesting story? Why do mainstream coins and altcoins rise when Bitcoin soars. But why do mainstream coins and altcoins bottom out when Bitcoin is soaring? I hope this article can help you better understand the reasons for the above situation through the theory of market cycles.
2. What is the market cycle?
The financial market itself is a collection of many investors participating and making decisions. Most of the decisions made by investors are affected by various factors, and generally they have specific laws. These rules are made up of elements. Maybe the time, the place, the context surrounding the financial markets, etc. But in general, it is from these laws that one can draw common ground and form their cycles.
So what is a market cycle?
A market cycle is a mixture of trends, which follow one another. Just as spring-summer-autumn comes and goes in turn, market cycles also go in stages.
Three: Market Cycle Statistical Table
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Hope is the first sign of recovery "Markets are usually showing positive signs of the new season. For now, though, most investors are still relatively cautious. Fund inflows into the market are relatively modest."
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This period begins when prices start to rise and new capital or EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) inflows increase relatively. This stage usually lasts at least 1 month, and when the market starts to go up, most investors have interest from the EME Hopevest stage.
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Optimism turns into trust when the upper body lasts a long time. At this time, old investors tend to invest more funds, dragging the tide of new investors, causing the price to rise. The difference in investing is that old investors tend to go very strong at this stage, while new investors invest cautiously.
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This is a time when most early stage investors will be looking for other opportunities as their old investments are booming. "This is also when the excitement of investors reaches its peak, and they will attract more new investors. On the whole, the entire market is cheerful and optimistic, and they don't think much about locking in profits."
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Every game ends, and right now, the psychology of most members participating in the market is highly greedy. Greed is pushed up to the greatest extent, and performances such as looking for a house, looking for a car, and leaving a job begin to appear. The goal is usually proposed at the horizon level (DeFi 2020). For example, if Polkadot reaches a price of 100 US dollars before the end of the year, I would like to send 10,000 yuan in red envelopes to each of Wally’s friends. Similar ideas impulse.
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During this period, those who eat on margin/leverage mostly burn out, or suffer heavy losses. The overall market usually moves lower on considerable volume, making it impossible for most new investors to understand a simple question: Who is selling at this price?
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Stage 7: Panic - need to sell ASAP
This is when inexperienced investors start to flee and sell coins for USDT to stabilize and survive the decline.
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Stage Eight: Repression, Depression and Anger - I Wish I Didn't Know This Weird Market
Usually, sadly, this is when most people end up losing money, but mainly the market will be sideways and the volume will be relatively low. These are lonely times in the market, nobody cares, and not many new people enter the market.
That's where the real experienced-smart cash flow starts building positions and re-examines everything on dips. After the end of the eighth stage, welcome to the first stage - hope. Round after round started, and new investors were born.
