Market sentiment is considered one of the most powerful forces in the world of investing, which pushes the prices. It reflects the emotion of the people towards the market either being afraid or not. These emotions, such as greed and panic, have also taught me that some investors are made or ruined over time, particularly those in the crypto industry. This development of market sentiment can be understood to explain why retail investors tend to buy when market sentiments are high, and to sell when market sentiments are low, whereas institutions silently do the opposite.

The majority of retail investors are the members of the crowd. As soon as the market begins to grow, the social media is full of chatter about excitement. All discuss easy money, and individuals are falling over each other to purchase the coins in a state of fear of missing out (FOMO).

However, at this point, institutions, big players with experience and data are already making profits. Institutions sell slowly when they are retailing, and they buy in large volume when the prices are low. This timing variance is what makes most small investors get in the market when it is too late.

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The same tendency is common in the cycle of market sentiment. It begins with uncertainty as the prices start to increase. This is followed by hope, optimism and euphoria as profits grow. When they are at top, they believe that the market would never collapse.

This is generally when institutions are leaving silently. Once the peak has been reached, the market starts falling, and panic sets in. Those who purchased towards the end, retail investors, begin selling at a loss. Institutions, conversely, start to repurchase in a recessionary and silent market.

Most of the retail traders do not have the tools and the patience that an institution can have. Their work involves the analysis of on-chain data, the activity of big transactions, and monitoring macroeconomic patterns. Influencers, social media trends and emotions are usually used by retail investors. This is the major cause of people losing money through this emotional investing.

As I have come to understand, the true trick is to think as an institution - to wait and make purchases when people are terrified, and to sell when people are desperate. The market mood is never going to be the same but the wise investor has to analyze the cycle and remain composed.

Being a Nigerian guy whose lessons in the marketplace were day by day, I have come to appreciate the fact that it is not what one reacts to but what one does in a manner that is wise, timely and disciplined that will bring success in the field of investing.