Bitcoin’s Decline — Part of a Natural Market Cycle: What Investors Need to Know

📉 Markets always move in cycles, and the current decline in cryptocurrency prices is just one phase leading to a new rise. Let’s explore the psychology behind the market cycle and understand how it affects price movements.

⚡️ Stages of Growth

1. Disbelief — The market begins to recover, but most people think it’s temporary.
2. Hope — Early buyers cautiously start entering the market.
3. Optimism — Confidence in sustained growth increases, investors actively buy.
4. Belief — Rapid price growth attracts mass attention, investment volume significantly rises.
5. Thrill — Market participants feel confident, begin borrowing funds for greater participation.
6. Euphoria — Peak growth, widespread belief in endless value increase, massive entry of new players.

⚡️ Stages of Decline

1. Complacency — Minor price drops cause confusion, but no serious concern.
2. Anxiety — Significant declines occur, causing worry.
3. Denial — Many continue to believe that the downturn is temporary and a new uptrend will soon emerge.
4. Panic — Realization of an inevitable crash, mass asset sales lead to sharp price drops.
5. Capitulation — Complete loss of faith in recovery, exiting the market with significant losses.
6. Anger — Disappointment, searching for culprits, blaming external factors.
7. Depression — Total lack of interest in the market, deep conviction of no prospects for recovery.

Where Are We Now?

We are currently in the Optimism stage, where many investors maintain their faith in the future development of the market. However, before the next growth phase, the market purges weak players, creating conditions for a powerful rebound.

What Lies Ahead?

After clearing out hesitant participants, a new wave of active growth will begin. Fear of missing out (FOMO) will drive many to enter the market at full capacity, repeating the cycle and reaching a new phase of Euphoria. Experienced players will then start cashing in on profits, triggering a new downward cycle.

📌Conclusions

1. Normality of Current Decline — This is a natural part of the cycle that smart investors use to build positions.
2. Best Time to Enter — During periods of fear and uncertainty, not during general euphoria.
3. Cycles Repeat — Each downturn is followed by growth, allowing the market to evolve and renew itself.