Bitcoin Prices/Ethereum Prices Rebound
FOREX INVESTORS Ethereum Turn Around Aaaand…they’re back. It hasn’t been too long since they crashed, yet Bitcoin and Ethereum are shooting skywards with resounding force. On Tuesday, for instance, BTC prices shot up 8.85%. ETH prices shot up 33.76%. And just for good measure, Ripple rose 13%.
What happened? I remember crypto-bears telling me that Bitcoin and Ethereum are doomed. I remember them saying that the crypto bubble is finished, and that we need to stop talking about blockchain technology. Seriously, where did all those people go?
After getting really popular really quickly, technologies tend to crash. It’s a matter of human psychology, you see. There are several waves of investors that pile into the stock, and with each new layer, fervor and optimism inch closer to a tipping point.
Ethereum Turn Around
At that point, the optimism collapses, “shaking out” investors that weren’t seriously in it for the long haul. You know the type. The weekend investors that hear about Ethereum or Bitcoin, but don’t do any research at all. They just throw money at it hoping to get rich.
The broader principle is well-known too. I call it the “shake-out,” Gartner, Inc. calls it the “Hype Cycle.” The name doesn’t matter. What’s important is that it is a standard trend, which means that it can be put under the microscope.
Market Cycles, Booms, and Busts
So don’t panic too much if the Bitcoin price and Ethereum price take a hit. They are market leaders in their particular corner of the technology sector, which means they are likely to come out of the slump with greater market share.
So when the next bullish cycle arrives, you might find them attracting a larger percentage of the total cash flooding into the industry.
The first round of bandwagoners. These are the copycat VC firms. They are trend-followers. Like leeches, they grab onto the best-performing startups before an IPO. They probably don’t even have a relationship with the company, or a deep understanding of what makes the company special. They just got in because the going was good. But when the going gets tough, these firms will be among the first to leave. In fact, they’ll probably be the first to exit after an IPO.
IPO and keep the hype machine going. At this point, the technology is not getting any more money from VCs, so they go to the public instead. Meanwhile prices continues to skyrocket, Some of the bandwagoners sell—the first signs of weakness are starting to show. Watch out at this point, because the crash is coming.
Prices crash, the fittest survive. In this crash, the losers either vanish or are gobbled up by the winners. Market power consolidates in the hands of the winners, and those with any sense of the long game stick through for the real value generation.