1/ # 2.5 Trends, Seasons and Bubbles

If you want to understand crypto, understanding speculation and speculative bubbles is the best thing to study.

Occasionally (although likely to happen less and less) we get a market-wide-run.

2/ These happen when theres a large new influx of people and money into crypto driven by some kind of mainstream FOMO such as stories in the news of Bitcoin going to a new ATH or some other big crypto news.

3/ This big influx of money knows even less about the 'tech' than the existing people in crypto and is more easily shilled. This big influx cascades through and begins a speculative bubble to form across the whole market.

4/ They runs are not sustainable and require ever increasing sums of money from retail/institutions to keep coming in, and covering those getting rich and taking out funds.

5/ The run then ends when the market is massively overinflated, on an unsustainable steep climb, and some kind of FUD/events happens which sufficiently knocks momentum out of the retail/normy/institutional interest.

6/ Sometimes, the situation is rescued as some catalyst happens which re-ignites interest, and the whole thing manages to continue on its exponential climb, but the higher it goes, the more difficult it is and the bigger catalyst is required, leading to an inevitable crash.

7/ New money stops coming in and we are left stuck with people HODL'in massively overinflated MC's, without the momentum/greed or cash input to make it keep going up at those levels.

8/ This is followed by a big crash, which sometimes happens in stages over many weeks, with huge levels of fear in the market, low levels of greed and it takes time for things to correct down.

Prior to two years ago crypto was very one dimensional.

9/ It was just BTC, ETH and then some utility tokens that didn't have any product. This changed when DeFi came, DEXs, followed by NFTs, Metaverse, Gaming. Crypto became a diverse thing with many different sectors to it. Due to this, the crypto market is changing.

10/ There is a still market wide movements based on BTC, global markets and sentiment, but the money inside crypto is beginning to move with trends more. These trends are speculative bubbles in particular areas and are just like the market-wide runs but on a smaller scale.

11/ You need to understand these trends.

They usually go as follows: Some new trend/'season' begins with something in that trend getting gains. It will be a new type of DeFi project, a metaverse play or some other type of concept, "dogcoins", "zk", "low cap L1"s.

12/ You will see things shilled using these terms "Its X season". People also see this, see the trend forming, see opportunity, and copy it making a new project. Its then shilled as 'The next $XYZ'. This does okay too (but usually not quite as good).

13/ This goes on with everything trying to jump on the trend/bandwagon of X, with degeneracy increasing. Existing projects even pivoting in for attention.

A speculative bubble forms in that trend as huge gains happen from everyone just throwing money at things in that trend.

14/ Theres real stuff happening in the 'trend' but its over-speculated and an ever increasing amount of degenerate junk. Eventually there is then is a market crash/downturn/implosion of that sector/trend due to the amount of junk.

15/ Sometimes if the trend is big enough its crash can even effect the whole crypto market (temporarily).

After this crash/correction, things recover but are not the same. There isn't the same level of speculative cash being thrown at that trend/sector.

16/ On the whole the money becomes smarter. It knows the degeneracy of the sector, it understands the value in the sector more. Its looking for more solid opportunities. Things don't move like that they did pre-crash. The problem is some people don't realize this change.

17/ They see an opportunity: "Wow $XYZ is now only Y MC. Its like $ABC was yet even better. This is a bargain'.

They buy, and it doesn't perform well or worse they lose money and are confused why.

18/ This happened because they only looked at the project and didn't factor in the change of market. You can see examples of this over the last 2 years. In the DeFi summer of 2020 which culminated in total degeneracy and the market imploding.

19/ When it returned DeFi degen plays didn't work the same. Many got wrecked. This then happened with launchpads, nft, and so on

You can never be sure when the 'season' is over, as sometimes something causes it to go again. But you have to be careful and cautious.

20/ If it is over, then the plays will still be there, but the quality/pumpamentals of what it takes for them to get gains will increase and there'll be less degeneracy, and less easy money. You need to be smarter.

21/ You need to learn to identify these trends forming to know what to best invest in, and to be watching for when the trend is about to end or has ended. People lose money because they often buy “the next X”, after the trend has ended.

22/ Be watching how they're performing, how people are talking about them, to maintain a sense of whether there’s still gains to be had. The market will alternate between eras where its awash with cash/greed, and eras where there’s less money and more fear.

23/ Use this current factor of greed/fear when working out whether somethings a good investment. When the market is in bull, you can take bigger risks, investing in projects that could be terrible (i.e dogcoins).

24/ When its in bear you need to fall back against fundamentals and be more cautious with your money. You need to get good at identifying current market sentiment by spending a lot of time on Twitter/Telegram.

25/ Also its important to mention: Be wary of anyone shilling you that 'X season' is coming next or soon. They are doing this because it aligns with that they hold or WANT to be the next season.

26/ You need to check yourself and look as to whether it is the case and don't just take someones shill as fact.

Adapt with the market or you will get rekt or miss out on opportunities. Play the optimal strategy for the CURRENT market.

27/ Don’t play a strategy that would be great for a market that has already passed. You'll often see people predicting the future based on some historical chart. Crypto is almost always in the unknown due to how much the space rapidly changes.

28/ You cant compare 2017 with 2021 because the market is so different.