Ethereum (ETH) has seen three types of accumulation cycles during its trading history. The first is the accumulation of smart money, also known as the early adopter. The second is the accumulation of institutional money. The third is the accumulation by retail money. These three cycles occur in the same sequence over and over again. After completing the cycle of accumulating retail money, we see a period of distribution. The distribution period often follows after retail accumulation in other markets. This is because retail investors are the most likely to succumb to the feelings of FUD or FOMO. They are more inclined to make investment decisions based on emotions and therefore end up losing smart money and institutional money all the time.
All this has happened repeatedly so many times throughout history that it is almost unbelievable to think that people make the same mistake over and over again. Think about this, when Ethereum (ETH) traded around $ 1,000, the vast majority of retail investors kept saying that they would have gone all in if the price had fallen to $ 400. The price fell to $ 400 yet most of they did not buy. The price has now dropped back to $ 121, but most of them will not buy again. This is because they think it could still fall to $ 100 or $ 70. The investor who once did not bother buying ETH / USD at $ 400 now counts the cents and cents to buy. As ridiculous as it may seem, this is the sad reality of retail investment and because most people end up losing money.
Chart for ETH / BTC (1W)
This is the reason why smart money is not purchased at the moment. Smart money does not care about sentiment. He cares about the fundamentals behind the investment and believes in the long-term future of the technology in which he invests. So enter the institutional money that is not as optimistic as smart money as they have a variety of investments in other markets and often have people respond to So, they only buy when the probability of downside seems low and the retail money is about to enter again in the market. The cheap prices that smart money accumulate are lacking, but it is not their goal anyway. The goal of institutional money is to buy and download retail money. This is as simple as it gets.
Retail money comes on the scene when you make purchases of both smart money and institutional money. At this point it does not take much to bring things to the next level. Retail money sees a flying rocket on the moon and jumps aboard. Some buy at the right time, some buy too late but the majority end up losing money. In the end, the smart money and the institutional money they bought when there was blood in the streets rose up as retail investors gave up until they saw the next flying rocket.