With Bitcoin’s recent price rally, it has helped to bring some positive attention to the cryptocurrency markets. The crypto economy is today of over a thousand unique crypto coins; all offered via blockchain technology.
Today, most of these coins are seeing price gains at rates almost never seen at stock markets. Every month, about two or three of these crypto coins will see a massive surge in their price. When these small initial surges happen, word spreads around fast on social media.
Investors rush to buy these crypto coins lest they miss out. As a result, most buyers become the proponents of their coin, pushing it to the masses. The reason is that they know the more people they can recruit, the more its value will surge.
The True Impact Of Such A System
In the confines of this kind of system, any development, whether a rumor or fact, becomes the driving force for a price surge. Shills on the internet, start to publish convoluted articles online, with the aim of spreading the word.
However, this shilling phenomenon is not limited to investors, bloggers, and YouTubers, eager to predict the next big thing contribute to it. While their intentions are honest, they end up being part of the hysteria and creating a Fear of Missing Out. Most of the time, the content does not care to explain if the coin will have any real-world applications.
The Hysteria Does Not Last
When this type of thing happens, it does not last long. No matter how sound the crypto-coin seems, the hype always dies down. When this happens, the value begins to fall once again, until the next hype.
The next stage is usually FUD or fear, uncertainty, and Doubt. At this point, positive criticism gives way to personal attacks on the character of the crypto-coin founders. Soon, everyone is seeking ways to leave the coin.
It is a classic example of mob psychology in play. In most cases, this cycle of fear and hysteria can be accurately traced on a chart as it happens. No matter how drawn out, it will always happen. The intentions of those who carry out such campaigns are obvious.
While some are doing it for the financial gains, others are doing it for the heck of it. They just enjoy seeing others being in financial misfortune. These are the worst kind as they will intentionally publish fake news indicating big things are poised to happen regarding the coin.
An Example Of This Cycle of Fear
A recent example of this is IOTA, which has risen and fallen in just a week. The surge began when an article ran on CNBC claiming it has entered into a partnership with Microsoft. With such a mainstream source reporting on this, it took only a short while for the price to surge.
Later on, another article was published claiming the partnership was a lie. It caused the price of IOTA to crash, and it has been crashing since.