Opinion Maturing Crypto Market is still drawing in Clueless Investors

Maturing Crypto Market is still drawing in Clueless Investors

June 5, 2021

2021 is still not at its halfway point and the cryptocurrency market still saw more news than the entire Crypto winter period put together. That included a strong rise in prices at the start of the year, followed by an astronomical climb to record values. For a BTC token, that meant reaching a sum of over 64,000 USD, which is a number not many could have conceived just six months prior. Now, however, the market is in a cooldown process where the prices slid by 30 percent or more across the board. That included an even stronger fall in markets like the much celebrated and much debated dogecoin. 

In many ways, this influx of news and activity, followed by an enormous social media reaction is an understandable phenomenon for generations brought up on esports and streaming video platforms. However, the problem becomes when members of the same generations rush into the marketplace for cryptocurrencies and even traditional stock, only to see their budgets, which are already burdened by things like student debt, gutted because of a clueless approach. Presently, the same MO seems like it is eerily not just present, but a default state of many newcomers to the crypto markets, all despite an ongoing and persistent process of maturity of the same financial ecosystem.

Healthy Information Basis

Decades of stock trading practices already set some healthy basics in place for everyone who wants to enter that  domain. Crypto markets are not any different. They too offer  a relatively consistent ecosystem of requirements that are always valid, no matter what the level of actual price volatility might be. The first requirement in that setup is more than obvious but still often neglected. It includes nothing more than simply being aware of the need to be informed about any asset a trader might be interested in. This does not include being completely informed and in the know about the same asset.

Realistically, that is not possible in the ever-changing modern world. Here and now, value changes hands as fast as that value itself changes based on a huge array of influences and factors. So, staying fully aware of all those is not something that any person or even a business can expect to achieve, no matter how engaged or diligent they might be. Instead, traders should always follow up on any new information regarding that particular asset, as well as any developments in the wider space of the same stock option or a cryptocurrency. Sadly for the new market participants it seems like the benchmark of information gathering is social media and its meme-saturated and often pointless discussions.

Seasonal FOMO  

This time as well, the thing that is driving all those investors into the crypto markets is the fear of missing out. During the height of the recent bull market, it was difficult to turn anywhere and not see the latest bulletins about the astronomic rise in BTC price. In that kind of an atmosphere, the well-known FOMO once more began wreaking havoc among the would-be investors who were very itching to jump into the action. That is a pattern that is more than familiar from the previous explosions in cryptocurrency value. 

But, the thing that is different this time around is the sheer amount of mainstream attention to the same changes in this economic niche. It is true that even before 2021, mainstream news media was not a stranger to cryptocurrency developments and events. Yet, even during the height of the 2017 bull run there was not nearly as much public attention in the form of short news, discussion panels, long reports, and all other journalistic formats, all focusing on the rise of crypto in that particular bullish season. With the same attention, the market began emitting a sense of FOMO that proved to be impossible to resist for so many newcomer investors and traders.

Dogecoin Phenomenon

One of the best showcases of the clash of all these negative trends is the ascendance of the dogecoin cryptocurrency that began in the recent months. This cryptocurrency network began basically as an open joke of the crypto community and the past craze of everyone and everything generating their own blockchain systems for decentralized currency. In the years following that development, the network hung around and dogecoin passed hands as well. For good reason, it was ignored during the 2017 bull run and it did not leave a big impression in the years that came during the Crypto winter. 

Yet, in early 2021, as all digital currency began gaining value, the same thing happened to dogecoin as well. But, thanks to celebrity endorsement like that from Elon Musk, the coin began a steep rise in price in the spring of this year. The same rise even put the value of one USD on its crosshairs, which was completely unthinkable only a year before. However, the price went down with the crash and now it stands a chance of climbing again if the same strange set of factors reappears. But, bigger chances are that all those members of the dogecoin army will simply lose the money they invested with very little opportunity to play the long game in this particular case.

Conflagrance of Influences

The last and most influential danger to the clueless investor class is the fact that companies and platforms that operate in the crypto ecosystem will not hesitate to take advantage of them in some shape or form. For example, Coinbase Pro recently listed dogecoin on its platform and now allows investors from the business domain to purchase the same token. 

This process operates on all levels, allowing for the same novice investors to get into the market guns blazing. This amounts to a process that is very similar to gambling. So, in a way, the same maturing market is still more than open to the clueless investor types and comes with very few safety nets that will stop them from blowing through their hard-earned money. The same nets are a necessity even in a very unregulated space like that of crypto and are a part of the same further process of maturing.