All markets are cyclical, and cryptocurrencies are no different. Attempting to understand where an asset is in its natural market cycle, based on sentiment, can help inform decisions on which positions to take.
Cheat sheets have been developed that explain each stage of a cycle and the matching sentiment across each phase. Near the peak of any cycle, investors become exuberant. Towards the bottom, investors become angry and filled with despair.
These emotions are easy to spot; however, it is distinguishing between hope and complacency that is far more challenging.