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The original was posted on /r/cryptocurrency by /u/fan_of_hakiksexydays on 2023-12-27 15:36:43+00:00.
Original Title: I've gone through a decade of crypto cycles, I'm still amazed at how cycles continue to repeat like clockwork, despite many things that should derail them, despite everyone knowing about them. Here's why they remain strong, what's causing them, and why they won't go away any time soon.
I'm sure some people out there still believe that "this time it will be different".
That has been the most unreliable phrase in crypto.
We are already seeing crypto ignore macros and traditional markets, and going right back to its cycles. Even on this sub, you see the same cycle of posts and comments.
Can anything derail the cycles?
We've seen war, recession, inflation, economic crises, threats of nuclear war, threats of of war with China, collapsing crypto banks, a pandemic, etc...
Yet none of that was able to derail Bitcoin's cycles. In fact, Bitcoin was already entering its bear market unfazed before all that stuff started, when stocks were climbing to new highs.
If anything, a combination of bad macros should have made the last bear cycles even worse, but it didn't even managed to do that. It was the mildest bear cycle, with Bitcoin's lowest percentage drop.
It doesn't seem like there's anything that can derail Bitcoin's cycles.
Even during the previous bull market, we had the India government ban talk and China banning Bitcoin mining. Neither was able to stop the cycle. Even Elon Musk was only able to briefly make the market dip, before it bounced back to new highs.
Why are these cycles remaining so strong, despite every wrench being thrown at them?
1- Algorithm
Part of it is how deeply ingrained the core causes are in an actual algorithm, and into the mining that's at the root of the tokenomics that affect such a big part of the market.
Something we've never had in a market before, or any other asset, because we've never had an asset that followed an algorithm at its core.
As long as Bitcoin dominates such a big part of the market, those tokenomics and that algorithm will also dominate the effect on the market more than anything else.
2- Human psychology and volatility
A lot of the psychological reactions also seems like clockwork. It really feels like each cycle people's memories are erased, and they repeat all the same mistakes.
I think part of it is because most people still don't understand what they buy, much less do any real research.
Also, it's a market that burns a lot of traders during bear cycles, and gets a batch with a lot of new people each new cycle.
More importantly, in the world of finance people still tend to be more emotional in their trades than really do that much learning.
Especially when there's a lot of volatility.
The volatile nature of this market pushes people's emotions to the brink, and allows for emotions to be much more dominating. With bear markets being incredible agony, and bull markets making incredible gain pushing people's emotions into ecstasy.
We already know about these cycles, so surely the next cycles should already be priced in?
We've been aware of these cycles for many years. And it hasn't stopped anything, and we haven't been able to price in all future cycles.
I remember when the theory of the cycles first became popularized during the 2017 bullrun. And by 2019, it became widely known and tested.
Before the 2021 bull market, there were some "experts" saying that we weren't gonna have a big rally this time, it would be different, because now everyone was expecting a huge rally, everyone knew about the cycles. It had to be priced in already.
Despite that, we still had a major bullrun like clockwork.
I've been through many cycles. It's still crazy how repetitive and cyclical this market has remained, despite everything. You can see this new cycle already starting like Groundhog Day. It's been the gift that keeps on giving. Here's what makes it so cyclical, and why it's not about to change.
What can end those cycles and finally make it "different"?
There's a few things that can end these cycles.
The most radical one is end crypto. The way it's still holding up despite everything thrown at it, still growing after all these years, still developing, I don't think it will go away anytime soon.
Something less radical and maybe more realistic, is the end of Bitcoin's vast dominance. If Bitcoin's tokenomics are no longer such a big share of the market, it will have a reduced effect on the market.
It doesn't even have to be taken over by something like Ethereum, just have a much smaller gap.
But that might not happen for a while.
Or simply time.
If you look at the effect of the cycles, it becomes less intense each cycle. If you look at a graph, you see the effect starts to taper off. Eventually, it should in theory become less volatile and stabilize a little more.
All things that are unlikely to happen anytime soon.
Conclusion/TL;DR:
These market cycles are the gifts that keep on giving.
The unusual nature of having an asset so deeply rooted in an algorithm for its core tokenomics, has made for an unusually cyclical market, where there is a unique force not controlled by humans but by an algorithm.
The volatile nature of this market has also pushed for a much more emotional market, making people repeat the usual expected market psychology, amplifying the cyclical effect of this market.
This is why we see the same mistakes repeated.
This is why this market has managed to stay so cyclical despite all the wrenches thrown at it, everything from mining bans, nearly monthly FUD, economic crises, war, and pandemic.
Even the market knowledge and expectations of these cycles, hasn't been able to "price in" these cycles or stop them.
Considering what's required to end these cycles, it's very unlikely to end or be that different anytime soon.