The Manic Depressive Nature of Crypto

The General Consensus on Crypto: Very Bullish and Revolutionary, but also Extremely Bearish and a Ponzi

As more people enter the crypto space, large investors, institutions, states, etc, they seem to be adopting a tone that mirrors the manic-depressive nature of crypto.

I say that with all due respect to these players and crypto [I’m a generally positive person, except when I’m not, which is randomly about half the time… hold on, let me check my Blockfolio <— joke].

What do I mean by the above? I mean the crypto community and everything it touches [from prices to people, to chat rooms, to talking heads] tend to be manic-depressive. Meanwhile, I’ve noticed new players coming into the game are adopting that vibe rather than changing the space via their influence.

Crypto is a bit like a slot machine. Most people don’t fully understand what is happening. They tensely push the button. Then a bunch of lights flash. It is exciting. Mostly the results aren’t great. But, sometimes the results are really good, and they get overly stoked on the merits of slot machines. But then they lose money a fun spins later, and like they are less stoked very quickly. If someone asks them how they feel about slots, their answer is likely dependent on their recent experience, not their overall logical and levelheaded takeaway.

I’ve seen some people gamble without showing emotion or getting greedy (some really good poker players for example), and people talk about professional gambling without getting emotional or greedy, but mostly people get emotional and greedy.

It is like that with crypto.

We keep hearing mixed messages from states, banks, large investors, etc. It can seem like every other headline rotates from 1. Major stock exchange embraces crypto to 2. Crypto not mature enough to trade directly. From 1. This is rat poison to 2. $25k Bitcoin very likely. From 1. crypto is an important asset of the future to 2. maybe though we are going to ban it just a little.

To be fair, we tend to get the same people being supporters and adopters, Goldman, Tommy Lee, Brian Kelly, CFTC and futures exchanges, crypto exchange operators, the NASDAQ, developers, some big investors and hedge funds, Malta, etc (AKA people who directly profit from crypto or crypto derivatives).

Likewise, we tend to see the same critics, Buffet, anyone who sells precious metals, some banks, SEC (more than the CFTC), and some members of state (people who compete with crypto, don’t have an understanding of the underlying tech, or would benefit if things were switched up a bit).

However, there is also cross over especially in the media where both sides are reported on.

And frankly, that mixed messaging in the media can get a little confusing. It is a bit like with politics, where you don’t hear a down the center list of pros and cons, you hear conflicting loud one-sided opinions one after the other.

Our site is guilty of this a bit (sorry; it is actually harder than it logically seems to avoid), but let’s use someone who isn’t us as an example of what I mean.

CNBC crypto is a good example of someone who isn’t us.

A CNBC article can be all Dogecoin lambos one minute, and the sky is falling the next. One minute it is a sub $6k price prediction by Goldman; the next a reminder that Goldman bought Circle when Bitcoin was $200 and it is likely going back to the ATH. Next, a Korean exchange may be cracking down, but the following minute you may hear how bullish Korea is on crypto.

Any average Joe reacting late to the news is going to constantly going to be getting mixed messages, which isn’t helpful. Worse, since things change quickly, reacting to the news of a day often has you selling when you should be buying the dip, and buying the rip when you should be selling.

The price action, itself rather volatile, tends to inspire these sort of mixed feelings people. This is true for me, and seems to be true for others.

Further, there is an element of difficulty here as what is good advice one day can end up being bad advice the next day because the 24/7 market can change substantially in moments.

Plus, crypto is just plain old complex and multi-faceted.

It is easy to focus on blockchain and smart contracts and all these bright devs and exciting coins, and lose sight of the predators, pump and dumps, and “bad actors.” Or, vice versa, zero in on the bad things and forget about the underlying positives.

Still, I’m not really making a comment on the Ethics or wisdom of what is, I’m more just saying, “I’ve noticed this.” This probably isn’t super helpful to understand if you have been in the game a while, but as a new user, it might be worth knowing.

If you come into crypto on an epic bull run, you will be coming in on a mania phase. If you come in on a downtrend, you’ll come in during a depression phase. Knowing that these flip flop around without much warning is helpful. Knowing that some of the best deals are found during the depression and some of the best times to sell are during the mania, that is, of course, helpful too.

Here are my thoughts on this: Those of us who have been around a while are wise to remember that crypto is all ups, downs, waves, and mood changes. It is important for those with a voice to stress to new users that crypto is volatile and that historically neither the good times nor the bad times have lasted. It is also important to stress that while there are a lot of positive points, and while it is clear that big players and the general public are adopting crypto slowly, we are still in early stages where anything can happen in terms of adoption, regulation, new tech, and changing sentiments. Going all-in over a John McAfee quote is very likely to get you burned. Many of those who are adopting crypto at these prices have money to burn, algorithms and experience that help ensure they won’t burn it, are hedging their bets, and are very patient. Retail investors need to be discerning, do their research, and no overextend in mania phases or be in a position that will cause them to panic in the depression phases. A thing that is sometimes A, but just as often B, is best treated like a two-sided coin in the air, it has potential to be A or B on any flip, and both outcomes should constantly be expected as they are just as likely.