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Wall Street Cheat Sheet (Psychology of a Market Cycle)

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Wall Street Cheat Sheet- Cryptocurrencies edition

Download the Wall Street Cheat Sheet poster here and read all about the famous Psychology of a Market Cycle that top traders are using.

We have recently seen the Wall Street Cheat Sheet (Psychology of a Market Cycle) being passed around all over the place in relation to the current crypto bear market. Until regulations really come into play and cryptocurrency ratings and fundamentals take over, the market looks like it will keep following these charting basics.

During this bear market we have gone through a lot of phases, in fact every bull and bear market over the last 10 years crypto has gone through phases and cycles. The Wall St Cheat Sheet (Psychology of a Market Cycle) being passed around so much effectively tells us the exact same story.

Does the cryptocurrency market follow the wall street cheat sheet?

Interestingly no matter how much we wish it were not true, our beloved cryptos have so far followed the classic stock market cycles. The Elliott Wave, the parabolic highs, the retracements, the crashes, etc. What we are seeing right now (December 2018) as we look to try and find the bottom of the market is a lot of people referring back to these charts in public, lots of YouTube videos and articles with high profile people all bringing up these classics.

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The Wall Street Cheat Sheet (Psychology of a Market Cycle):

Wall Street Cheat Sheet Psychology of a Market Cycle

Above is the Wall Street cheat sheet poster.

So what can we make of all of this? Is trading and are all financial markets really that predictable?

I am no expert technical analyst and will never pretend to be. All I can do is look back in hindsight as well as looking around me as to what is currently happening right now. Certainly the past can be made to fit perfectly into these cycles. Crypto Twitter sentiment is also beautifully following the Wall St Cheat Sheet right down to the anger phase we have seen in Q3 and Q4 of 2018. But does that mean that we can expect the whole positive phase to start off again in 2019? I would not dare to make that prediction, of course there will be a rally but how low do we go before that happens?

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Is the herd mentality to blame for the boom and bust patterns?

We all know people who bought the hype in late 2017, hell you may be one yourself. We also all know people who are selling right now either due to the panic phase we are in or simply because financial constraints or over stretching on the way down means capital needs to be found from somewhere and there is no other option than to cut losses. One of my colleagues at work sold last week citing a complete loss of faith in crypto. The herd mentality certainly plays a large part in these market cycles.

Are Wall Street, the banks, the media and / or governments to blame for this current bear market?

Given the fact that Wall Street and other major global banks and financial forces have been spending years and countless millions preparing for their entry into the cryptocurrency space I think it is a pretty safe bet that they have been using their Wall Street Cheat Sheet for years in playing the crypto market. In such a young market and with so very few cryptos actually having a use case let alone a working product this market has and still is ripe for manipulation. With little by way of regulations to stop market manipulation it has been an absolute field day for very early entrants and for powerful players to reap the rewards and crush the naïve. Always look at what they are doing and not just what they are saying!

Wise thoughts:

I don’t think I am alone in also looking at the governments as a huge contributing factor in the current bear market. Governments are traditionally slow in recognizing emerging markets and technologies. They don’t have the interest, skills and knowledge in house and it takes time for them to realise what is going on. It is no surprise then to have seen the Q1 2018 mass of warnings, bans and negative press. The cryptocurrency market grew at an astonishing rate and the governments were not ready, not prepared and didn’t have any skin in the game. This could not be allowed to carry on till they were ready to capitalise (and protect).

The media and it’s influences on the market cycles

What about the media then? Well we know that the media loves big stories (positive or negative it doesn’t matter as long as they get your attention). The media follows trends of course but let us not forget that the media is also owned by some very powerful corporations. Conflicts of interest are rife in the media (mainstream media as well as crypto media of course). And the media is the number one driving force behind the herd mentality, and in many respects, the Wall street cheat sheet phases.

Teach yourself at least a bare minimum knowledge of the market technicals

I could carry on writing for hours about the various factors in play in any market but as I say, I am not an authority in these matters. What I do see (and hear) is that there are powerful and influential players who are either experts in market technicals or are employing teams of experts. The markets are far too orchestrated for this not to be the case so if you are serious about investing do your fundamental research as well as getting a basic understanding of the Elliott Wave, Fibonacci sequences and basic technical analysis as this will help you out in the long term.

Everything is coming together nicely for some big winners and some bigger losers

  • How low are we going to go? Nobody knows though there are plenty of opinions out there.
  • Is Bitcoin going to remain at number 1 or is a new king being prepared to be crowned?
  • Will any top 25 coin go to zero?
  • How many of the thousands of cryptos will die?
  • How many are going to see massive gains

Regulation and a future bull run

I have none of these answers for you. What I believe is that we will see another massive bull run at some point in the future, but when that will be is anybody’s guess as there is still much left to be put into place before that can happen. Regulations are still not in place for the most part. Big players like SBI and Bakkt keep delaying the launches of their exchanges. Fidelity, Nasdaq and stock exchanges all around the world have not set clear launch dates yet. Bitcoin ETF’s look like they will never be approved. In the meantime massive mining companies are going bust, many crypto related companies and exchanges are exit scamming and the need for individuals, hedge funds and crypto miners to sell to pay their bills remains a massive drain on the market.

Always be careful and never invest more than you can lose

Be careful out there, don’t over extend yourself, do your research and good luck to all of us. Bear the Wall Street cheat sheet in mind or not, it’s just another factor for research. Fingers crossed Q1 of 2019 is the start of the positive reversal but I’m not going to bet my house on it. I am balls deep but I haven’t invested more than I can afford to lose even if we drop another 50% or more before the good times return.

Wall Street Cheat Sheet Bitcoin (2020 update)

Can you really use the Wall St Cheat Sheet in relation to Bitcoin and other cryptos? The answer is yes of course. Historically the Bitcoin charts have followed the Wall St Cheat Sheet very well and as we head into 2020 it looks like we could see yet more repeats. Bitcoin looks like it broke out well ahead of other cryptos and has already passed the euphoria stage and is perhaps in the complacency phase. There have been some smaller alt coin pump and dumps and a lot of smaller cryptos should and could die completely but for big crypto names such as XRP it looks like their charts are still in the depression phase.

Bitcoin and XRP

It is quite likely that when Bitcoin starts dropping towards capitulation this will coincide with the rise of (foremostly) XRP and ETH into the hope phase. Much like 2017 when Bitcoin dropped from it’s peak, the money started moving into alts. This remains the quickest and easiest way for Bitcoin maxis to gain maximum profits when selling out their holdings. And it is quite likely that XRP will be the coin of choice for Bitcoin maxis to pump as it has real world use and is already being used by banks and remittance companies so is a very easy sell to generate fomo from the general public.

Institutional investors and whales

A no brainer to use XRP to inflate the value of their Bitcoin holdings as there is no institutional or retail interest in BTC and absolutely no new money coming into Bitcoin today. Nobody outside crypto cares about Bitcoin, nobody is interested and nobody is taking a chance on it. Bitcoin doesn’t solve any problems, is too slow and unreliable for real world use, completely unscalable and is not a good store of value. Nobody is buying that narrative anymore so to bring in outside money they need to make crypto sexy again and that will come from the coins which are usable and serve a purpose.

And so the Wall St Cheat Sheet strikes again!

Wall Street Cheat Sheet in Crypto 2023 update

Yes here we are in August of 2023 and the extremes of the Wall Street Cheat sheet have reared their head once again since the last update. Does anything change in crypto? Let’s take a look:

Some of the notable events that happened during the crypto bull market of 2021:

The Majors
  • Bitcoin reached an all-time high of over $64,000 in April 2021, driven by increased institutional adoption, such as Tesla buying $1.5 billion worth of Bitcoin and MicroStrategy adding Bitcoin to its balance sheet.
  • Ethereum also reached an all-time high of over $4,000 in May 2021, boosted by the growth of decentralized applications (DApps), decentralized finance (DeFi), and non-fungible tokens (NFTs) on its network.
Dogecoin and the crytpo market cap
  • Dogecoin, a meme-based cryptocurrency that started as a joke, surged over 12,000% in 2021, thanks to the viral support of celebrities like Elon Musk, Mark Cuban, and Snoop Dogg.
  • The total market capitalization of all cryptocurrencies surpassed $2 trillion for the first time in April 2021, making it larger than the GDP of many countries.

Some of the notable events that happened during the crypto bear market of 2023 so far:

The Majors:
  • Bitcoin dropped below $20,000 in June 2023, losing more than 70% of its value from its peak in April 2021. This was triggered by several factors, such as China’s crackdown on crypto mining and trading, Tesla’s reversal on accepting Bitcoin as payment, and regulatory uncertainty in the US.
  • Ethereum also plunged below $1,000 in July 2023, losing more than 75% of its value from its peak in May 2021. This was caused by several factors, such as the delay of the Ethereum 2.0 upgrade, the rise of competing platforms like Solana and Cardano, and the collapse of several DeFi and NFT projects.
Memecoins and the overal market
  • Dogecoin, which reached a record high of over $0.7 in May 2021, crashed to below $0.01 in August 2023, losing more than 98% of its value. This was due to the loss of popularity and support from celebrities, the lack of development and innovation, and the emergence of other meme-based cryptocurrencies.
  • The total market capitalization of all cryptocurrencies fell from over $2 trillion in April 2021 to below $500 billion in August 2023, losing more than 75% of its value.

Wall Street Cheat Sheet 2023 Conclusion

2023 has seen some key lawsuits brought by the SEC in their attempt to cripple the cryptocurrency innovation being lost by them. The SEC loss in the SEC versus Ripple case will have hurt them badly, as will the recently lost case the brought against Greyscale.

Despite these heavy losses for the SEC (we have regularly reported on the baseless nature of the case against Ripple and indirectly XRP) the crypto markets have so far been unable to sustain any positive momentum. This has plunged many investors into the Depression stage of the Wall Street Cheat Sheet.

Always take care and do your own research before investing

Crypto markets are cyclical and volatile, and they can offer both challenges and opportunities for investors. By understanding the characteristics and causes of bull and bear markets, investors can better prepare themselves for different market scenarios and make more informed decisions. Whether you are a bull or a bear, crypto investing can be a rewarding journey if you do it right.

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