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Emotions and the Crypto Market Cycle
In the world of cryptocurrencies, human emotions play a key role in market movements. Prices rise and fall not only due to technical or fundamental factors but also because of the psychological behavior of investors.
Emotional stages of the cycle:
1. Optimism: The market starts to rise. Investors feel confident and begin to buy.
2. Euphoria: The price skyrockets. Everyone wants to get in. It is believed that "it will never go down." This is usually where the market peak occurs.
3. Anxiety / Denial: The price begins to fall. It is thought to be "just a correction."
4. Fear / Panic: The decline accelerates. Many sell out of fear of losing everything.
5. Depression: The price hits bottom. No one wants to invest. Hope is lost.
6. Hope / Recovery: A slow rise begins. Interest and confidence return.
Why is it important to understand this?
It prevents impulsive decisions.
It helps to buy logically rather than out of fear or greed.
It allows you to identify what emotional phase the market is in and act intelligently.
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