The Wall Street Cheat Sheet is a great guide for gauging sentiment in a market, and given the recent upswing this year, where does crypto currently sit? We think we know the answer.
2020: A New Hope
Taking a snapshot of the Bitcoin daily chart and comparing it with the Wall Street Cheat Sheet suggests that we are somewhere between the ‘disbelief’ and ‘hope’ phases, having navigated ‘anger’ and ‘depression’ as interest in cryptocurrency has fallen away following the popping of the bubble in 2018:
Should the rally fail here, which would be represented by Bitcoin closing out of the upward channel it has been in since the turn of the year, we would likely have to endure a 2-3 month downward grind, erasing the recent gains before we could try again. This would take us towards the halving in May with a neutral to bearish outlook, which would not bode well for those who have hung their hopes of a recovery on this event.
On the flip side, if this is to be a full scale recovery and we are currently sowing the seeds of the next bull market, we can look forward to moving from the hope to the optimism phase over the next few months as the market hots up, leaving the behind the dead projects as it goes.
It’s All in the Mind
Despite mirroring price action, the Cheat Sheet is a purely psychological chart, and so in order to confirm where we are must study the sentiment in the community. Doing so, in this case via the likes of crypto Twitter and trading groups on the likes of Telegram and Discord, reveals a very different sentiment and mentality to what we have seen since the bubble burst in 2018.
Almost every rally in the past 18 months has been met with a defiant bearishness from the community (or those that were left), with any pumps being relentlessly shorted and a grim determination to hold on through the crypto winter.
What feels different this time however is the genuine sense from many that the good times are back, helped of course by the continuous green days we have experienced this year so far. The change in the air is palpable, with all but the stubborn few still scarred by losses occurred in 2018 believing that we really are moving into the next cycle:
Which coin has the best chances of going 10x from here?#BTC
— Don CryptoD (@DonCryptoDraper) February 12, 2020
— Paddy Stash (@paddystash) February 12, 2020
Price appears overextended on many #altcoins, however many have also broken out of 6 month+ consolidation periods.
I’m keeping in mind the big picture. Bear market conditioning will harm my profitability.
— Bagsy (@imBagsy) February 12, 2020
Zoom Out and Buy Bitcoin
Zooming out to the weekly chart seems to confirm that we have finally come out of the bear market and are climbing the slope of the next bull market, with the bottoming out after the 2019 run landing us right where we would have been had we experienced the 2019 pump and dump:
The halving narrative certainly helps the notion that we are finally out of the woods, but it is more the timing – just one look at a chart like the weekly above suggests that this time, to borrow a fateful phrase, it’s different.
Now, where’s that space suit…