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For those that were too young to experience it(myself included), the dotcom bubble was a internet-based bubble that occurred in the late 1990s. During this time, the value of companies grew exponentially with money being poured in to any company that claimed to be the next big internet company. This speculative fad increased the Nasdaq index fivefold from 1000 to 5000 between the years 1995 to 2000. The result of the bubble being popped saw a drop of 77% in the Nasdaq resulting in billions of dollars lost from investors and bankrupting many tech startups.
What we’re seeing in the crypto sphere right now sounds a lot like what I described above. Although the crypto bubble hasn’t been fueled by institutions yet, retail investors are swarming in and chucking money at any crypto that claims to be revolutionary. At Reddit, Twitter and Discord, I’m seeing thousands of individuals claims x,y,z cryptos are going to be “the next big thing” or “to the moon!!”. All of this is overhyped. Cryptos like Dogecoin are shooting up based solely on hype and celebrity endorsement, I write how I think Doge can go to $1 here: https://futureoverload.com/2021/02/08/why-doge-to-1-is-possible/
With this being said, I don’t believe there is a lot of danger in the short-term. This crazy bull market that we’re in is just getting started from what I can see.
1. Alt-coin season hasn’t even fully commenced yet. There is still a ton of attention on Bitcoin and Ethereum, once this attention begins to fade you’ll see a ton of money flow into Alt-coins.
2. The 1.9 trillion stimulus package from Biden hasn’t landed yet, and with the economy closed and individuals being engaged in stocks and crypto now more than ever, it’s safe to say that a good chunk of that change will flow into crypto.
There’s no sure way to time the market, anyone who tells you otherwise is lying to you. For the time being, trading and taking profits should be a safe strategy. I sense that this bull market will most likely last at least half of the year, maybe the full year. Keep an eye on the economy and the overall crypto market, don’t dump money into coins without any intrinsic value and hold forever. They may crash and never recover like we saw during the Dotcom bubble.
Be safe with your money but also take advantage of the easy hype that’s going on right now, and make some profit during these times.
But most importantly: never invest more than you’re willing to lose! Be safe!