The market cycles back and forth like this
1. Break 4000 USD
• Market atmosphere: A high point not seen in two years, media headlines flood with 'ETH Returns to its Peak.'
• Retail psychology:
• 'It has risen so much, it can't rise anymore, there must be a correction.'
• Thinks he is smarter than the market, decisively opens a short.
• Result: Prices surge directly, shorts are liquidated, leaving the first wound.
2. Break 5000 USD (new historical high)
• Market atmosphere: News floods in, social media influencers start shouting 'The bull market has started, 10,000 is just a matter of time.'
• Retail psychology:
• 'Historical high is the top, I bet this wave will definitely see the top.'
• Add to short position again.
• Result: The market does not look back, liquidation warnings keep sounding, accounts are harvested again.
3. Break 6000 USD (new high again)
• Market atmosphere: Retail friends in groups are flaunting their profits, people around asking 'How to buy Ethereum?'.
• Retail psychology:
• 'It has surged so much, buying at this high will definitely get stuck.'
• The shadow of the last liquidation makes him hesitate, unwilling to enter the market, choosing to stay in cash and observe.
• Result: Watching prices continue to surge, mindset gradually distorts.
4. Break 8000 USD (acceleration phase)
• Market atmosphere: Various predictions flying everywhere, analysts start giving long-term targets of 'ETH 50,000'.
• Retail psychology:
• Finally can’t help it: 'I was wrong, I want to chase the long!'
• Open longs at high points, but as soon as entering the market, a correction begins.
• Panic stop loss then reverse and short.
• Result: The correction ends, prices turn upwards, short positions explode again.
5. Break 10,000 USD
• Market atmosphere: Completely enters media frenzy, FOMO emotions to the extreme.
• Retail psychology:
• Too many liquidations, mindset gone, only 'gamble' left.
• If bullish, go all in; if bearish, go all in the opposite direction.
• Result: Longs and shorts kill each other back and forth, account balance left with only single digits.
6. Inertia FOMO Zone
• Market atmosphere: Prices reach new highs every day, no one cares about valuation logic, all are slogans of 'tomorrow will definitely be higher'.
• Retail psychology:
• Completely brainwashed, believing 'this time is different from before.'
• Start using credit cards, loans, and mortgaging houses to add positions.
• Result: End of the bull market, prices surge to an unexpectedly extreme high (e.g., 15,000, 20,000), retail accounts appear to skyrocket.
7. End of the bull market → Cliff-like drop
• Market atmosphere: The crash comes without warning, news headlines change from 'ETH Leading the Tech Revolution' to 'ETH Plummets 30%'.
• Retail psychology:
• First day drop: 'It's okay, normal correction.'
• The next day drops again: 'Average down, catch the bottom.'
• Third day continues to drop: 'The more it drops, the more I buy.'
• Fourth day: Insufficient margin, liquidation.
• Result: Wealth returns to pre-liberation levels, even less than before the bull market.
Psychological closed loop
• Beginning of the bull market: Disbelief → Short selling → Liquidation
• Mid-term: Hesitation → Missed opportunity → FOMO
• High point: Go all in long → Stop loss on correction → Reverse and short → Liquidate again
• Finale: Full position long → Crash → Liquidation to zero
• Final insight:
• 'I will never touch this again' until next time.