There were signs during the last bull market that showed cryptocurrencies were about to take a turn for the worse, as it has been for some time now, and while this current market has been somewhat discouraging it is also a necessary part of the stabilization that will eventually see cryptocurrency markets become mainstream.
With this in mind, we looked at the last bull run noting indicators that will show investors when the bubble might be about to burst. These red flags, if you know what you’re looking for, can help the smart investor decide about his/her assets, allowing them to sell out before the market takes a turn for the worse.
Now, while these intuitive signs of a coming downturn are not scientific, they did all come to fruition during the last bull market and like a bubble that has gotten as much air as it can hold just before the human eye catches signs of its imminent destruction, so can signs that similarly warn us of the impending destruction of a bull market.
- The first sign that should grab the smart investor’s attention during a bull market is when your “normal” friends and family start asking you how to get into the space with their own assets. The reason for this is because if the market is drawing so much attention that people who would normally fall asleep when the subject of cryptocurrency is brought up are now flooding you with requests for information, then the smart investor knows this to be a red flag because the activity levels are so frenzied that the momentum will cause the bubble to expand beyond its ability to hold form.
- Another sign is when celebrities endorse projects during a fever pitch trying to get more gullible money flowing into various projects that the smart investor would avoid, but “get rich quick” investors will flock to like moths to a flame.
- One more thing to watch out for is a marked increase in the amount of media coverage inviting others to follow them into the abyss. Because “get rich quick” investors will read and listen only to those media sources that agree with their frenzied assessments of projects that will supposedly bring them lots of profits in a short period, there will be a lot of it for them to consume. This coverage could range from a flood of videos on social media to actual news reports coming from sources like BBC or CNN, and when you start to see much more “advice” from sources trying to tell you how, or when, to buy into cryptocurrency then the smart investor should consider this as a red flag.
- Smart investors will know when they see a high amount of “garbage” projects hitting the billion-dollar mark (which would be the gold standard for any “normal” business entity) that it is time to make some decisions. This is a sure sign of “extreme” speculation designed to pull in the suckers, and during the last bull market when these types of projects hit their peak, it wasn’t long before the bear came in a wiped them out.
- Last, when the smart investor sees a sharp increase in the number of other investors writing about their wealth and becoming braggadocios about their own investing powers that vaulted them to the top, then it should be a red flag. This is also an excellent time to look within and see if your own feelings mirror those who are becoming braggarts and if so then a smart investor might need to pull back and make some more smart decisions.
Like many soldiers, police officers, corrections officers, and others that have jobs where intuition has many times saved their lives can tell you, red flags are never a sure sign of anything, but those that ignore them often wish they hadn’t. Intuition, many times, is that thing that keeps us from walking into the fire and in the case of investing in cryptocurrency could be the only thing that gives the smart investor’s feet out of the flames.
While none of this is scientific, and there aren’t any charts, graphs, or tables that investors can look at to show where these red flags are planted, they are; however, the signs that came right before the bear market we find ourselves in today. While no one is saying that these signs are a sure indicator of bearish market activity, they should at least get smart investors looking at their surroundings to see if a bear market is almost on top of them.
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