Panic Mode? What a Wall Street Chart Tells Us About Bitcoin's Price

Investing in financial markets can be an emotional roller-coaster and the bitcoin market is no exception.

For years, traders and investors alike have studied the cycle of market emotions with the help of a chart known as the "Wall Street Cheat Sheet."

As seen above, at the top of the market cycle is "Euphoria" - a point of maximum financial risk.

This is the time when investors think nothing can go wrong and a self-feeding cycle is established: more investors enter the market for its stellar returns, leading to a further rise in price and valuations reach dizzying heights before, eventually, reality bites hard.

The bitcoin market has arguably gone through "Complacency," "Anxiety" and "Denial."

Those hopes were shattered as BTC nosedived below $6,000 on Nov. 14, pushing the bitcoin market into the "Panic" stage, causing investors to look for an exit with no price floor in sight.

The price of bitcoin has since fallen nearly 50 percent from the $6,000 mark, trading at an average price of $3,327 according to CoinDesk data at press time.

As recent as Nov. 1, bitcoin suffered just that and it seems panic is still the most likely candidate for bitcoin's current stage in its market cycle, at least until a break below the psychological price level of $3,000 incites capitulation.

So this leaves us studying the market cycle after recent violent price drops, searching for visual cues of a "Bottoming out" of the current bear trend.

With all the sellers now out of the market, accumulation at basement prices can begin, which eventually provides the energy for the start of the next market cycle.