Market cycles, sentiment & hindsight bias
Charts look obvious in hindsight. They never did at the time.
Analyst · 9 min · Updated 2026-11-08
💡 Weather seasons, not a calendar
Seasons follow a pattern, but you can't know the exact day the first frost arrives, and some winters are brutal. Crypto markets have shown boom-and-bust "seasons", but the timing and severity have differed every time. A sentiment index is a thermometer — useful to read, dangerous to treat as a forecast.
A brief history of crypto cycles
2013–2015 — Bitcoin rises above $1,000, then Mt. Gox collapses (2014); price falls over 80%.
2017–2018 — ICO boom; BTC near $20,000, then an ~84% drawdown into late 2018.
2020–2022 — Pandemic crash, then DeFi/NFT boom; BTC peaks ~$69,000 (Nov 2021). Terra (May 2022) and FTX (Nov 2022) collapses follow; BTC falls ~77%.
2024–2025 — US spot Bitcoin ETFs launch (Jan 2024); April 2024 halving; BTC sets new highs above $100,000 in 2025, followed by sharp corrections.
Sentiment indicators
The Crypto Fear & Greed Index (by Alternative.me) combines volatility, momentum, social data, dominance and trends into a 0–100 score. Extreme readings show crowd emotion; they don't say when it will change.
Biases that cost money
- Hindsight bias — "it was obvious". It wasn't.
- FOMO & herding — buying because everyone else is.
- Loss aversion — refusing to admit a mistake, holding losers too long.
- Survivorship bias — we remember Bitcoin, not the thousands of dead coins.
- Recency bias — assuming the last month predicts the next year.
🧮 Practical example: the time-traveller test
Key takeaways
- Every cycle had 70–85% drawdowns.
- Sentiment is a thermometer, not a forecast.
- Name your biases to resist them.
- Survivorship bias hides the failures.
Education only — not financial advice.