Hi guys,
In this one I wanted to briefly outline the 3 main issues that contribute to the current madness in the information space surrounding cryptos.
As we all know, Youtube, reddit, as well as blog and comment spaces everywhere are filled with wildly different opinions, each less justified than the one before.
"Bitcoin will reach $100K in 2018"
"Bitcoin will drop to $100 sooner than you think"
etc., etc., etc.
It's very important not to succumb to one of these wild speculators, especially if you have a vested interest and pre-existing hopes/regrets.
With that in mind, I think its valuable to think about the main reasons why this sort of madness has persisted for so long.
#1 Profits make prophets
One of the most striking reasons has to do with peoples tendency to flock behind "the winners". There are plenty of kids now who made a small fortune in the market, which of course is fine - good for them (those lucky knuckleheads). But the issue starts when the new kids coming in are looking to them for guidance in how to repeat the same success again. This is especially dangerous when the market is now exiting the phase when you can just buy and hold till the tax man calls.
#2 No one can predict a blind goose
The second reason has to do with the lack of any kind of fundamentals to base the pricing on. In the stock market you have annual reports and cashflow, in fiat you have monetary policy and macroeconomic measures, in the bond market you have tax revenue and credit ratings, but in cryptos?... Well, you might have something like company roadmaps and transaction volume, but the market seems to absolutely ignore those in a wild goose chase that is hoped to reach the moon.
In this vacuum of rationality, logic takes a back seat to mob psychology and people pick-and-choose which arguments to listen to. This brings me on to Nr #3
#3 We are overwhelmed by a resonating dichotomy
Increasingly it seems that the world is splitting into two factions:
- The first is adamant cryptos will launch to the Moon and resist any critical/more down-to-earth views
- The second is outlandishly skeptical and possibly sour due to the profits they have missed
This situation drives people not to the most sensible or best articulated arguments, but rather to an echo-chamber of their faction. Down turns are therefore either ignored as passing corrections or as the materialization of the prophecy for coinocalypse. Either way, it is again a force which favors certain types of opinions over objective ones.
So, to summarize, the crypto market currently seems to foster an information space where
- successful first adopters are treated as shamans in jungle tribes
- nobody really understands what the heck is going on, nor are there concrete variables to analyze
- people are so invested in proving the other side wrong, they ignore their mistakes in favor of blind hope
As such, all bets are off the table in terms of who can or cannot become the loudest mouth in the casino.
Would you agree with these points? Is there someone you would argue has been immune by this insanity?
Let me know in the comments
Happy trading!