This morning when I looked at the total market cap for crypto, I thought "yep, the market is just about to roll over". I've expected a downtrend for months, as have a lot of other analysts.
The general consensus is "another retesting of the lows" and hitting a firm bottom. Not everyone agrees and I've seen some contrary forecasts to my views. Which is fine. But the contrary views tend to draw a whole bunch of lines and triangles on charts and back them with no common sense or human psychology.
The predictions are floating in mid-air and attached to vague lines connecting to "what we did before". TA is great in the hands of a pro. But in the hands of a noob, you get some forecasts that predict a bull run when the market is still weak from a bear slumber.
The way I look at the market is simple. I think like a human being. I ask myself, what will other human beings do? What will be the reaction?
One of the "indicators" I use is the cycle of market emotions chart as seen above. The thing that people don't get is that it is based on a fixed psychological progression that is not random or chaotic. Human beings follow these very cycles, stage by stage, in our macro and micro emotional lives.
The cycle chart is one of the core principles of chart analysis... but it tends to be treated like an interesting curiosity found while surfing the internet. Peeps, that chart is for predicting macro trends and where the market is heading next! It should be the foundation for TA and what all those lines and triangles reference.
So bolt your TA to it!
To be honest, the chart above is incomplete but it is accurate and serviceable. There are more subtle stages in between like the one I'd like to point out today which explains the current crypto market and where we are headed in the next month or two.
Between Despair & Hope
If you look at the chart, you can see where we are not. The crypto market is not overconfident. It's not excited. Not relieved that the bear market is over.
If the crypto market is riding a train, I would place the market just after "despair" and a long way before "hope".
The reason I say this is because the market is "desperate for gains" and while there has been a great altcoin rally recently with some "sick gains" to be made such as EnjinCoin, etc, those gains are very short lived. Alt coins are popping off randomly and the investment risk is high because you don't know which one will go next or for how long.
Gains are there but we are not in an extended nor stable altcoin season.
But, this is not how commentators are reading the market. Desperation for gains and desperation for the bear market to be over are clouding peoples views. So the extreme weakness and high risk of a downtrend at any time is ignored.
Hope, as indicated on the chart, has appeared but it's still a long way off on the horizon. We are still in the "energy", the vicinity of despair which can inspire "desperate acts".
Given we are talking about a market full of amateur, retail investors, many of whom are up to their eyeballs in credit card and other debts, you have to be wary. You also can't expect a solid return of the market on day 1 after an 15 month bear market. That's hopium, not reliable.
So I expect the community to misread the market and miss the chance of a downtrend when coins appear to be popping off after the bear Winter.
Hope is on the Horizon
Right now, "hope" has just appeared on the horizon but has not stabilized. When it does, "relief" will appear on the horizon and a firm close of the bear market will take place. And a new uptrend will happen.
But like any psychological stage, "hope" has it's downsides too. Hope inspires you to think positivity about the future, which can lead to unrealistic expectations based on your current reality. A great example is over-committing capital and draining your cash flow ( now ) when the height of the bull market and profits are a year or two away. That's one example of hope-gone-wrong.
Basically, hope is future-based, not now-focused and can be just as problematic as despair. I won't go into it all here in this post and will cover it properly when we have arrived in Hope-town.
For now, we are still a month or three away from a firm bottom of the market and still in the region of despair.
In my mind, "hope" will appear when the market has hit a firm bottom and double-bounced. Which will take a few months to amble down to those price levels.
I'm expecting the market to roll over in April and begin it's descent. Which will raise alarm bells with YouTubers who will scurry around and redraw their technical lines of intellectual guesswork. April will fall ( which I actually thought would happen mid-March, to rectify the Whale movement on Feb 9 ) and May will be similar. The market will bottom late-May to June and we'll fumble sideways before the long climb into what will be an epic bull market.
Epic, peeps, epic!
Thanks for watching,
Brendan Rohan - Indie developer of 'next gen' natural medicine from Melbourne, Australia
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