Catching Up to Crypto by Ben Armstrong

Author:Ben Armstrong [Armstrong, Ben]
Language: eng
Format: epub
ISBN: 9781394158768
Publisher: Wiley
Published: 2022-12-27T00:00:00+00:00

Moonboys and Lambos

The 2017 bull run was also marked by obnoxious displays of wealth, which is why mainstream media came to define crypto as excessive “moonboy” culture. The newly crypto‐rich consumed so conspicuously, and social media posts about new Lamborghinis became so common, that the “lambo” meme has been forever cemented into crypto culture. Toward the end of the cycle, some really crazy things started to happen, and there were signs that the party would probably be coming to a close. But many of us were caught up in the excitement and the vision of a decentralized future, and we didn't want to see those signs. And many of us new to these types of markets hadn't yet learned how to look out for “top signals”: indications that the market is frothy or overheated. But no matter how promising a new technology or asset class is, it will not go straight up forever.13

There will always be somewhat of a cyclical nature to markets. This strikes at the core of human psychology, which exist in all markets, from old to new. At some point the people who got in early are going to sell and take profits, which will start a cascade of selling pressure that the demand side is usually unable to maintain. This is where we see the transition from a bull market to a bear market, where prices fall 20% or more. It's pretty much unavoidable regardless of what you're trading. Assets with a long history tend to be more stable during both good times and bad, but newer assets tend to be more volatile. Many who are new to trading don't realize this, and are seduced into buying when the hype is at its peak – thinking the increased value makes it a sure thing. In reality this is usually the worst time to buy, but when you're in the midst of a bull market it's very difficult to tell where the top is – especially with crypto, where valuations so often exceed our expectations.

Even experienced traders had a problem timing the top of the market in 2017; every week brought even more hype and higher prices, so it felt like we were at the top for most of the year. Traditional brands were tripping over themselves to attach their names to blockchain projects or make callouts to crypto culture in their advertisements. One of the most ridiculous examples was when the New York–based beverage company Long Island Iced Tea changed its name to Long Blockchain Corp. The stunt pumped the small company's stock by 450% and gained it a ton of free publicity. Paid celebrity endorsements started to get out of hand too – especially when the celebrities didn't disclose that their posts were paid sponsorships, leading to serious financial penalties. Rapper and producer DJ Khaled was fined $152,725; for his secret agreements with dubious ICOs, boxer and promoter Floyd Mayweather was fined $614,775.14

Of course, as more giddy users got on the networks the most popular blockchains started to suffer major throughput and scaling challenges.

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