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Why Does Crypto This Season Feel So Different From Previous Seasons? 🤔
I. The Cycle of Financial Markets Always Repeats 🔄
A well-known argument in financial markets, and even more so in crypto, is the idea of the market cycle. Essentially, this theory suggests that markets operate in repetitive cycles driven by the psychology of market participants, reflected in price movements. The cycle begins with low prices , followed by growth into higher price regions , a peak or "top" , then a collapse , and eventually, the cycle begins again. This repetition not only refers to price movements but also the psychology of market participants.
I don't disagree with this theory. In modern economics, cycles of 10 to 15 years have repeated for over 100 years, and there’s no sign of it breaking. With crypto, the 4-year cycle is often referenced. But have you ever wondered: “Why must the cycle repeat?” 🤔 or “Why does each cycle have to be the same?” 🤨 2 replies
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However, there’s a catch: if we look too broadly, we risk misunderstanding . While human instincts remain unchanged, the mechanisms that activate these instincts evolve over time. For example, when the steam engine was first invented , many people were frightened by the sight of a smoking train, a glowing lightbulb 💡, or a flying airplane . Today, such phenomena would be met with little more than curiosity. The same principle applies to financial markets. As the knowledge of most market participants evolves, so too will the market’s behavior. Therefore, each cycle will contain both familiar and radically different elements. This isn’t bizarre or illogical; it’s simply how things evolve. 🧑💻 1 reply
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