S4B Crypto Contest - Season 14

Hello guys,
Its another day of the week and I'm delighted to share with you all my entry in this amazing contest organised here by @waqarahmadshah which talks about stock and the cryptocurrency market. Most of us do not know the history behind the stock market especially those of us that started cryptocurrency recently.

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It is important to mention here that before the coming of cryptocurrency, technical analysis have been used in the stock market and that is why if you check through the history of most indicators you will notice that they were firstly developed for the stock market usage and not for the crypto market usage.

In essence, everything that is happening in the cryptocurrency world today has been in the stock market for about 100 years now and that is why most successful traders go as far back as looking at the stock market behaviour and comparing it with the cryptocurrency behaviour come out with a better analysis.

How do bull and bear markets in cryptocurrency differ from traditional stock market cycles?

The difference between the bull and bear market of the cryptocurrency from the traditional stock market cycle is very simple. Firstly, we must be aware that the cryptocurrency assets are virtual assets whereas the stock market asset are real asset representing a company and this include shares we get and hold for the company.

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Also, the volatility in the cryptocurrency market is much since it is a digital asset and can easily be access by anyone anywhere and anytime provided you have an internet connections and since it is a blockchain and decentralised in nature.

The case of the stock market is completely different from the cryptocurrency market because for you to get a stock you must go to a company and then physically purchase your share and you buy also based on the amount the company is willing to sell.

So with these you can see why the cryptocurrency world is very different from the stock market. The usage and accessibility of the cryptocurrency is what makes us to have bull run and bear run. The fluctuations is die to the many patronage.

What are the key indicators that signal the transition from a bear to a bull market in crypto?

Like I have clearly said in my introductory passage of this publication, this indicators are mostly designed for use in the stock exchange market because cryptocurrency existance started when BTC was developed and deployed in the year 2009.

All the indicators we are going to be looking at are indicators which were developed in 80's and 90's. So without further ado let's look at just 2 of these indicators that signals the transition from a bear market to a bull market in the cryptocurrency world.

Exponential moving average (EMA)

This indicator is made up of two lines which is the fast moving average and the slow moving avearage. When there is a crossing between these moving average lines it means that the trend is changing or has changed from either bullish to bearish or from bearish to bullish depending on the initial movement.

So when you see these crossing, you will set yourself ready for the opposite movement and you either buy or sell depending on the direction of the market. So that is how to use the EMA indicator.

Commodity Channel Index (CCI)

Another indicator I want to talk about is the commodity Channel Index CCI which is an indicator use to identify overbought and oversold region of an asset. It is made up of numbers between -100 to 100 with the center at 50.

When the price of the asset is above the 100 lime it means that the asset is overbought and then expected reversal will set in. In the same way when the price is below the -100 it means the asset is oversold and have a possible reversal to the opposite direction.

Describe the psychological factors that influence investor behavior during crypto bull and bear markets.

There are many psychological factors that influence investors behaviour during the crypto bull and bear market and one of them is the fear and greed index. Humans general have this character in them and if not careful most people die because of the fear and greed index when their money is trapped in the market due to some certain movement that may led to liquidation.

Another factor that influences investors behaviour during the crypto bull and bear market is the news. When you as an investors begin to hear bad or good news about a certain project you have invested in, you will be tempted to either remove your money or add more to earn. So those are few of the things that I believe influence investors.

Finally, I want to invite @josepha, @solaymann, and @waterjoe to also join the contest here in this community today.