What is a Crypto Bubble? Learn to Identify It Before It Bursts

Bitcoin has just broken $64,000 for the first time since 2021, and the question everyone is asking is: are we in another crypto bubble?

How a crypto bubble works

A crypto bubble is basically a price rally driven by pure FOMO and speculation, without any real value justifying it. Unlike stocks or bonds, most cryptos do not have tangible assets or real income streams, so it all comes down to market sentiment.

The typical cycle works like this:

1. Initial hype: A project is born with revolutionary promises, attracting early adopters
2. Mass speculation: Investors see quick profitability, enter the game
3. Viral Fomo: Social media explodes, influencers drive the coin, capital enters without research.
4. Irrational euphoria: Prices soar without fundamental logic
5. The peak: Profit-taking begins, negative news filters in.
6. Panic: Massive selling, price crash
7. Recovery: Solid projects survive, scams disappear

History of crypto bubbles you should know

2011: Bitcoin jumped from cents to $30 in months. Then it fell to single digits. First scare.

2017-2018: The classic. Bitcoin soared to nearly $20,000 in December 2017, collapsed to $3,000. At the same time, the ICO boom generated thousands of fraudulent projects that devastated investors.

2021-2022: Bitcoin surpassed $68,000, NFTs were selling JPGs for millions. Everything exploded. NFT volume collapsed, Bitcoin corrected 60%+.

Warning signals ( before it's too late )

Price: Increases of 100-200% in days or weeks = red flag.

Uncontrollable hype: Dominates Twitter, appears in mainstream news, ordinary people talk about crypto on the street.

Extreme volatility: Wild fluctuations in hours. Sign of speculative trading, not solid investment.

High Volume: Massive transactions with large orders = emotional, not rational decisions.

Extreme Fear and Greed Index: Readings close to 80+ indicate irrational euphoria.

Trading with increased margin: Growing leverage = amplification of gains AND losses. Dangerous game.

How to protect yourself if you feel a crash is coming

• Reduce positions: Take profits strategically if you see signs of a bubble
• Monitor news: Stay alert to regulation, macro events, project news.
• Consult experts: It's not shameful to ask for advice
• Think long term: Bubbles are cycles. Solid projects recover.
• Stop-loss: Orders automatic sales if the price drops by X%. Protects your capital
• Discipline: Avoid emotional decisions. Stick to your plan, not the noise.

Can you make money in a bubble?

Theoretically yes, but it's like playing Russian roulette. The risks are enormous:

• Total losses when it explodes
• Greater regulatory scrutiny afterwards
• Proliferation of scams during the boom
• Liquidations if you use margin

The inconvenient truth

Bubbles are part of the nature of crypto. Combine speculation + human psychology + new technology = inevitable cycles. But they also leave valuable lessons: the importance of real due diligence, understanding the underlying tech, not falling into FOMO, and never investing more than you can afford to lose.

Bitcoin Is It a Bubble Now? It depends on who you ask. Some see speculative cycles. Others defend its value as a long-term decentralized asset. The reality: probably a bit of both.

The important thing is not to get caught up in the hype with no way out.