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

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

First, it’s important to clarify: this is not market prediction or trading signals. This is 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 a single step.
It usually goes through multiple stages:

The first stage 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 moment.

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

Then comes disappointment and anxiety.
The market declines again, wiping out all or part of the rebound gains. Those who bought the bottom fall into unrealized losses, and their willingness to buy the dip disappears entirely. Market sentiment shifts to irritation and numbness.

In the past, this is when the long process of bottoming begins.
The market enters a prolonged sideways or downward phase, lacking 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 painful phase is often just a false bottom. The market needs time to “wear down” everyone’s expectations.

Mapping this to the current Bitcoin situation, 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, more important than guessing specific levels is judging the current stage.

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 combining candlestick patterns

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