- The Wall Street Cheat Sheet is a great guide for tracking typical market sentiment
- The chart tracks the emotions people typically go through during an asset market cycle
- Where does crypto sit nine months after the $69,000 top?
The Wall Street Cheat Sheet is a very handy indicator as to the ups and downs of typical market sentiment during an asset cycle. It was created in 2014 by Damien Hoffman and charts the emotions that most traders and asset holders go through during bull and bear markets, and is a particular favourite with the largely amateur crypto crowd. With the latest Bitcoin top of $69,000 having been established nine months ago, where do we currently sit on the Wall Street Cheat Sheet and what can we expect from here?
The Wall Street Cheat Sheet is eerily accurate in forecasting investor bias at certain times during a market cycle:
The beauty of the crypto market is that the whole thing is moving so rapidly that you can feel the emotions change from one stage to the next almost overnight, making it a perfect case study. Let’s compare the chart to price action since November 2021 and see if we can make a correlation:
It’s not perfect but it fits pretty well, especially with the panic and capitulation felt in the last months. We can say with confidence then that we are either going through or, more likely, are about to go through, the ‘Anger’ phase, where the rally off the bottom dies a death and prices stagnate and then get gradually worse and worse. For Bitcoin this could mean a return to $14,000 to properly flush out those with any hope left.
Depression is Optimism
Of course, an optimist might suggest that the ‘anger’ phase has already gone and that this is ‘depression’, but the cycle hasn’t played out long enough yet, which we can see if we compare to 2018-2019:
As we can see, there is still some time to go before we can get past anger and into the depression phase. After all, with some NFTs still worth six figures, the market still has plenty of correcting left to do.