The Dark Side of the Moon. Embracing emotions

As usual, a word of clarity. I’m not a financial advisor — just someone who has been part of the crypto community long enough to have experienced quite a few “crashed bottoms” and “hyped tops”. This article shares my experience regarding the bottoms. If it helps you to better understand aspects of the cryptocurrency market (especially in light of crowd sentiment) — the goal is achieved.

Below is a frequently mentioned chart illustrating crowd mood development in the markets:

the general overview for the “mood of the crowd”

The general problem with this chart is that no one really knows exactly what point we’re at in the moment. Are we just before the “Institutional investors” enter the space? (they are still mostly waiting for regulation to happen in the crypto market). Or have we just experienced the “ultimate top”? With all the media attention, ICO enthusiasm and talk of a “new paradigm” of raising money in a democratic way directly from the people — it could also be said we are in a “blow off phase” right now.

Or maybe this chart doesn’t apply to the cryptomarkets at all? (Just an idea.) What if we can build an ultimate top without institutional investors, then experience a “blow off phase” and then repeat the same circle once again?

By say, the year 2025, I think we’ll have a clearer picture of the macro pattern we’ve just been through in the cryptocurrency market. But right now, honestly, very few have clear ideas on this topic.

And, basically, understanding on this level — how exactly we fit into the picture above — is not really needed.

We believe it’s enough to understand how crowd psychology generally works, acts, and shows itself. What if we simply try to “live in the present moment”?

As we are building (or moving towards) the bottom now, the focus of our analyses should be: how fearful/scared/concerned/worried are we?

The darkest hour

Here’s my experience from the last big bottom in ETH, back in August-December 2016. I take it as example simply because I’ve been heavily financially involved in Ethereum over the last few years and my emotional experience here is the strongest.

yeah, ETH was at $6–$10 just a bit more than a year ago

Honestly — it was super hard to hold through the bottom circle. At the beginning it was relatively easy, yet as the price kept “irrationally” falling more and more, suddenly the mood flipped. It’s like.. you can’t control it any more, but you feel different, very different. You see the world in much darker colours, the problems seem to be real, and no good news seem to be moving the market up at all.

My internal conversations went like this:

  1. Ah, no problems, just a bit more down
  2. Look, this is a double bottom, reversal is near!
  3. Hmm, that’s weird.. But we will hold whatever the price will be
  4. Damn, I should have sold before. Could buy at cheaper prices
  5. Hmm, it’s recovered a bit.. But all the problems are still here. Need to wait for a “confirmation”
  6. Be careful guys, may be it’s a good idea to wait a bit more..

As you see, this “building the bottom” passes through specific stages. It’s happening right now. These are mostly emotional stages that one experiences internally, with oneself. The details might be different between individuals, but the general experience will very likely be almost the same. It is a direct experience. And no one can escape it.

You will also observe changes in the public language at popular crypto hangouts (reddit, trading channels/chats). Calls for the bottom will become less and less frequent as people give up. Those who remain will get very negative responses too. This is a natural way of expressing the mood of the crowd (and your internal emotions too). Don’t resist — embrace.

If you’ve just entered the market (especially close to the top) — welcome and hug, crypto brother. We’ve all been through it.

Welcome to the “Dark Side of the Moon”.

It will also change.

Santiment is a crypto market intelligence and insights-generating platform. We’re building smart tools and a vibrant community aimed at bringing clarity to crypto trading and investing. While we do it with the help of machines, what is most important is human-generated content. If you have market analysis skills and wish to join us, drop a short line in the comments. To learn more about Santiment, visit our website at https://santiment.net, sign up for our newsletter at http://eepurl.com/cfgl3n, and join our Slack (it’s closed to protect the quality, but you can ask for an invite in our general purpose Telegram channel)