The Story: The four stages of the digital currency cycle
The crypto market reached 830 billion on January 8th 2018, and now by February 6th, it’s taken a sharp drop to 300 billion. Speculators all over the world are shaking their heads until they hold their heads and wondering why, what happened. Nobody has any clear answers, but it can be enlightening to look at the patterns that normally play out in this market.
- The boring phase. Savvy investors are quitely putting their cash in, developers are plunking away at their keyboards in dark basements. On the surface, nobody really cares about crypto. The only news that reaches the mainstream is sensational pieces about future technology, or witchhunts for Satoshi Nakamoto. The total market cap goes down, or sideways.
- The organic growth phase. New investors start getting involved, hobbyists and techies who see the potential of the technology. The media starts running some stories about the price action during the odd spike or drop. The market cap goes up, slowly and steadily.
- The hype growth stage. The greater public start hearing more about it, and seeing the price action makes them start sweating. They feel the fear of missing out, and they decide to invest. The market gets into a feedback loop with big media – media notices the price action, hypes it, leading to more buying, leading to more more price action and media attention. At this stage, you’ll start to see people on social media saying how Bitcoin can only go up, saying it’s a new paradigm. The market cap might jump up more than 10% in a day.
- The dead phase. Nobody knows exactly how it starts – perhaps a whale takes profits, and the price drops suddenly. Pretty quickly, all of the investors for the fear of missing out, decide they will exit based on the fear of loss. The media declares Bitcoin and digital currency dead once again, and slowly they lose interest.
Soon enough, the cycle restarts, and we enter a new 3 to 9 boring months where, from the outside, nothing seems to happen.
Of course, history never repeats exactly, but by being aware of these patterns we start to have an idea where things are headed, and wherever we are on the path we can learn to be grateful for the opportunities that we do have. Join Kurt on a roller-coaster ride of emotions from terror to gratitude in this spine-tingling, spine-rattling episode of… The Paradise Paradox!
If you enjoy our posts, please become a patron on Patreon, or have a look at The Paradise Paradox’s page on Steemit where you can join, earn money, and upvote our posts to help support the show! You can also find a lot of additional content which is not posted on this site, with Kurt’s posts on Steemit.
We really appreciate all of your contributions! Every cent and satoshi we receive lets us know that we’re doing something worthwhile, that you are entertained by our program, and that you’re starting to question what you know more and more. Please be generous. Donate to The Paradise Paradox. Or buy some stuff on Amazon using this link. Or buy some of our great T-shirts here.
If you enjoyed the episode, don’t keep it a secret! Feel free to share it on Twitter, Tumblr, Facebook, Reddit, or your office bathroom wall.