Wall Street Cheat Sheet - Psychology of a Market Cycle

Wall Street Cheat Sheet - Psychology of a Market Cycle

Back in mid to late 2017, the crypto space saw a colossal bull run. If you were in the crypto space back then and experienced that massive run up until mid December, you know just how euphoric that feeling was when you saw your portfolio see tremendous gains within such a short amount of time.

If you didn't experience it, let me give you an idea of what it was like.

It felt like everyone was at the casino and everyone was just making money hand over fist; it was an epic time.  

There wasn't a day that went by where I didn't see any sort of mention or talk about crypto. Heck, I even remember hearing some old aged people talking about it when I was walking on the street! 

Crypto was talked about practically everywhere on social media. "Bitcoin this, Ethereum that."

If you were in the crypto space for more than a few months, you were considered to be an "OG" and every one wanted to ask you questions.

People were coming out left, right, and centre calling out ridiculous price predictions over the coming years. Probably the most infamous price prediction was made by John McAfee. He said that Bitcoin would reach $500,000 by the end of 2020 or he'd eat his manhood if it didn't. 

People were complaining all over social media about how their account was taking forever to get approved because the exchanges were just so inundated with new sign ups. 

Numerous ICOs were popping up daily and were pitching how their coin is going to revolutionize the world. 

The late 2017 run up was probably one of the most surreal times that I've experienced. I couldn't fathom seeing double and triple digit gains all within such a short time. It was nonetheless pretty awesome.

That was until mid December 2017 rolled around and the proverbial police bashed down the door, raided the home, and ended the party.

Quarter 1 of 2018 was when I first saw some real massive blood on the streets. Coins were taking massive blows. I'm talking about 70%+ losses within the first few months. In fact, a lot of coins practically became worthless and people lost lots of money; just look at Bitconnect. 

To ease the discomfort of seeing my portfolio's value plummet, I often resorted to watching crypto video memes to seek out a good laugh in what I was experiencing and to remind myself that I wasn't alone in this.

You can get an idea of what the massive drop was like in this video meme that was created and released shortly after in 2018. If you haven't seen this video, it's worth a watch. I got a good laugh out of it when I first watched it. I guess it was funny because it was true:

As someone who was relatively new to crypto and trading, I sought out answers as to why the prices pumped and dumped as hard as it did. It wasn't until that I started looking for answers did I come across this image of the "Wall Street Cheat Sheet" which is essentially a chart depicting the psychology and emotions of markets. Below is the "Wall Street Cheat Sheet."


After researching all that I could find about the plummeting crypto prices, I had learned that this wasn't the first time Bitcoin had experienced such a dramatic sell off. I found out that markets are cyclical and that they all go through the different stages outlined in the cheat sheet.

The chart extrapolates a segment of a bigger market cycle and analyzes the psychology and emotions involved with each part of it. It starts off with prices going up and then dips down where people are in disbelief. The market goes back up and people then become hopeful, optimistic, a believer, thrilled, and finally experience euphoria. Right after the bubble pops, and prices come tumbling down, people start becoming complacent, anxious, and deny what the price action is telling them. They finally panic sell and capitulate only to become angry and or depressed. 

From the cheat sheet, you can see that it illustrates perfectly how people's emotions or psychology are tied in to the market's price. This is why I think that being a profitable trader is difficult to achieve; fear and greed make us irrational. 

I personally experienced something similar to what the cheat sheet describes. However, the highs and lows I experienced weren't that extreme. I guess it's because I didn't have that much invested in crypto at the time. 

If you ever experience something similar to what the cheat sheet is about, just refer back to it and just keep in mind that markets are cyclical. The cheat sheet can help give you a better sense of where we are in the market cycle. Make sure you "check yourself, before you wreck yourself" as the saying goes.

As a discretionary note, I will say though that this cheat sheet doesn't apply to all coins. Especially for the sh*tcoins.  You can't polish a turd.

Here's a video I made on the Wall Street Cheat Sheet:

If you've ever experienced what I just talked about, leave a comment down below with what your experience was like and how you handled it. I would love to know how other people in the space dealt with it.

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If you have any questions or comments, please feel free to leave them down below as I will respond. You can also contact me at cryptoforcanadians@gmail.com. You can also message me on Telegram @cryptoforcanadians or feel free to join my Telegram group where we talk crypto: https://t.me/crypto4canadians.


Educating Canadians, and others, about crypto.


Educating Canadians, and others, about crypto.

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