Tips: Why the Crypto bubble is actually a good thing
For the past couple of days, the crypto market experienced another dose of FUD news and Whales Wars, which caused a relatively big dip of more than 20%. A lot of new investors started asking the same old question we have been listening to for years – is this the end of the Crypto bubble?!
The following article will try to explain why this is not the end of crypto and why the Crypto bubble is actually a good thing for the market. Yeah, that’s right the bubble is good wojaks, stop crying.
First, let’s start with a short explanation of what the heck is a bubble. According to the English dictionary:
a bubble is a reference to a good or fortunate situation that is isolated from reality or unlikely to last
In retrospective, the biggest investment bubbles in history captured people imagination, which in turn stimulated price mania. When something new and radical is invented, which promise to make you rich, it can easily justify astronomical prices. All this said, obviously the crypto market is a bubble – it’s a radical new invention, which might change the world, it promises enormous fortune and for most of the people it is far away from their reality and comfort zone.
On top of that, most of the people and investors within the crypto space know for a fact that it won’t last for a lifetime or at least in the way we are now experiencing it. But this doesn’t mean that we can’t make some profits while we can and ride the right moon missions.
Now let’s cut to the chase, the first and the most important thing why the bubble is good is that sharply climbing prices always draw public and investment attention. For around a year the crypto market generated massive returns for many people, while the general media outlets continuously told the public that this is obviously a bubble and a scam. Many financial experts drew conclusions and comparisons between the crypto and the Dotcom bubble from the 90s. Meanwhile, the bitcoin price was constantly rising and all the news and expertise turned out to be actually good for the crypto market, because they drew the investment attention to the market. Many Wall Street whales saw the opportunity of the crypto and in December managed to officially introduce regulated BTC futures contracts in the U.S.
This was a massive step towards more transparent and regulated crypto market and a big statement that the real investors are boarding the ship.
The second important reason that makes the crypto market bubble a good thing is called reflexivity theory. Basically, this refers to the circular connection between cause and effect and the feedback loops they create. To put it simply, the idea and the believe that crypto will change the world draw more investment to the overall market and rise the price. The increase in price in turn lead to massive returns which lead to actual change in people’s life’s, which loops back to more people actually starting to believe in crypto and further emphasize the idea that it will change the world, leading to even more investments and etc.
In my opinion, this is what we are experiencing now, many people shared the ideas and technologies behind the crypto market and tried for years to spread the word. After couple of years they finally managed, bitcoin hit the mainstream media all over the world transforming the ideas and beliefs of people and investors, who noticed the market and the opportunity and started entering. This is basically the first cycle when the word is out there and people start investing.
Obviously, the people with the biggest investments also noticed that they are a bit late for the market and the price we’ve seen in January is ridiculously high. On top of that, the market is unregulated meaning they can do all the nasty things they used to do on the financial markets. Since 7th of January, we are constantly seeing whales desperately trying to push the price of BTC down. They generate fake stories, they use trading bots and massive walls to scare the ordinary people and they even influence governments in order to generate more FUD stories.
All this happens because they are trying to accumulate cheaper BTC and actually make some profits while doing it, but I think it won’t be for long. In couple of months when they are finished accumulating btc, they will turn their actions around. They will start spreading good stories and positive news and the cycle will continue…