Crypto Bubbles? Understanding the Cycle Before Getting Burned

Question

Bitcoin has just broken $64,000 for the first time since 2021, and with it come the same old questions: are we in a bubble? Is it time to sell or hold?

The answer is not simple, but history does leave us clear clues.

Crypto bubbles: Why do they happen?

Unlike stocks or real estate, most cryptos do not have real cash flow. Their value depends 100% on what others are willing to pay. This makes them extremely sensitive to hype and speculation.

The typical cycle works like this:

Phase 1: Initial Hype → A new project promises to revolutionize everything. Early adopters come in.

Phase 2: Massive FOMO → Media, influencers, guys in the WhatsApp group start talking about the topic. Everyone wants to make quick profits. Prices skyrocket.

Phase 3: Irrational Euphoria → Prices rise to absurd levels, completely disconnected from reality. No one wants to analyze fundamentals, just HODL.

Phase 4: The crash → Either negative news comes in, or the buying simply runs out. The early sellers, then the panic. Prices drop 80-90%.

Disaster History

2011: Bitcoin went from cents to $30 in months. Then it fell to single digits.
2017-2018: BTC reached nearly $20,000, then dropped to $3,000. Thousands of “revolutionary” ICOs turned out to be scams.
2021-2022: NFTs sold for millions. A year later: trading volume plummeted. Bitcoin also had a rally to $68,000 before correcting.

Warning signals (learn to see them)

Price skyrocketed in days/weeks → If Ripple or Solana triples in 2 weeks, something unusual is happening.

Extreme volatility → Wild changes in hours indicate speculative trading, not real investment.

Abnormal trading volume → Giant orders with little analysis = emotional money.

Unreal Capitalization → If the sum of all cryptos grows faster than real adoption, there is a problem.

Triggered leverage → More margin trading = more systemic risk.

Extreme Fear & Greed Index → When it is at 80+, people are blinded by greed.

What do I do now?

If you see the signals:

Reduce position ( don't sell everything, but do sell what you can't afford to lose )
Activate automatic stop-loss
Stop looking at charts 24/7
Do not trade with leverage

Long-term focus:

Study the technology behind the project ( not just the price )
Do not invest more than you can afford to lose
Ignore the noise from social media
Strong projects eventually recover

The million-dollar question: Is Bitcoin a bubble?

Debatable. Bitcoin has gone through boom-bust cycles several times, but unlike trendy projects, it has real value proposition: decentralized money. The debate is whether the current price reflects that or if there is excessive speculation on top.

The truth: Bubbles come and go. The important thing is not to lose everything on the journey.