Where exactly are we in the market cycle? Why is the "bottom" so easily misjudged?

The chart shows a classic market psychology cycle. I’ve specifically circled the bottom area: it’s here that most people are losing money and exiting the market, yet they believe they’ve made rational decisions.

First, it’s important to clarify: this article is not market prediction or trading signals. It’s simply my personal logical framework for observing the market.

When the market declines, the true bottom often shares a similar psychological structure, rather than a price pattern.

The actual process of forming a bottom rarely happens in one step.
It usually goes through multiple stages:

Stage one is panic selling
The market drops sharply, fear spreads, holders are forced to liquidate, and some even think, “I just want to get out and forget everything.” This is when most people's psychological defenses collapse, but the market rarely bottoms out at this point.

A technical rebound usually follows
The market rebounds, sometimes by 20%-40%. Investors may get the illusion, “Phew, I think I’ve bottomed out.” The most dangerous mistake at this stage is mistaking a technical rebound for a trend reversal.

Then comes disappointment and anxiety
The market declines again, erasing all or part of the rebound gains. Those who bought the bottom are now in floating losses, and their willingness to buy the dip disappears. Market sentiment shifts to frustration and numbness.

Only after this does the long bottoming process begin
The market enters a prolonged sideways or downward trend, with low volatility, attention, and conviction. Even long-term holders start to waver. This stage is often the true incubation period of the bottom.

Core logic:
Panic selling without a prolonged period of suffering is often just a false bottom. The market needs time to "wear down" everyone’s expectations.

Mapping this to the current Bitcoin market, my observations are as follows:

- The quick rebound after a sharp decline is only a technical correction, not a confirmed bottom signal
- Continuous strong upward movement without consolidation may actually trap bulls
- The boring sideways phase after a surge or plunge is the critical period that determines the subsequent structure

I’m not in a rush to draw conclusions, nor do I want to distort the market with subjective wishes. For me, understanding the current stage is more important than guessing specific points.

If you’re interested, we can explore further:
- How to distinguish between a technical rebound and a trend reversal
- Features of the true bottoming phase
- Detailed technical analysis using candlestick patterns

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