Are We Really Doing the Crypto Hype Cycle Again?

It’s safe to say crypto is experiencing renewed interest since the crash of 2022. Bitcoin just hit its highest price since 2021, the SEC’s approval of spot Bitcoin ETFs has investors very excited, and the market cap for all crypto just breached $2 trillion. But everyone who’s ready to FOMO their way into crypto should ask themselves: Should we really be doing this again?

The last time the crypto market was this hot was late 2021, and things were looking very rosy in the world of fake money. Bitcoin was at an all-time high of $69,000 and there were countless TV ads featuring celebrities hawking crypto. Super Bowl LVI played ads that now live in infamy with Larry David and LeBron James promoting FTX and Crypto.com respectively.

Matt Damon even showed up on TVs early in the last big crypto hype cycle, premiering in October 2021 with an ad that insisted fortune favors the brave, just a month before Bitcoin would hit its all-time high. That ad would be widely ridiculed, but it helped set the stage for a lot of heartbreak as average, hard-working people got into what they thought was a good investment.

There are a lot of signs crypto history is about to repeat itself. Crypto’s “fear and greed index,” maintained by Alternative.me, has reached its highest “greed” level since November 2021, as Coin Telegraph points out. And Peter Thiel’s Founders Fund reportedly bought $200 million worth of crypto starting last summer and continued into the fall, according to Reuters. That means Thiel likely got in at a Bitcoin price of around $25,000, half of what it is today.

Should you invest? Not with any money you can’t afford to lose. Crypto is a Ponzi scheme. And you can run a Ponzi scheme as many times as you like, as long as people are willing to hand over their money. Crypto defenders will insist figures like Sam Bankman-Fried, the convicted head of collapsed crypto company FTX, were just bad apples. SBF was convicted on seven counts of fraud and conspiracy in a highly publicized trial that caused regular people to lose faith in crypto. But the reality is that the entire crypto enterprise is a house of cards. Nobody has yet delivered a great use case for crypto beyond buying drugs on the darknet or other highly illegal activities.

In fact, the U.S. Treasury Department just released a report on Tuesday about how popular crypto is with human traffickers and producers of child sexual exploitation material. Bitcoin is the digital currency of choice for the scum of the Earth. And it simply doesn’t work well as a currency because of its highly volatile nature. Why would you spend Bitcoin to buy a pizza if your Bitcoin might double in price in a short span of time?

Bitcoin is such a shitty technology that stablecoins needed to be invented in order to effectively trade since the blockchain can only handle a fraction of the transactions that established financial networks like Visa can handle. That’s where SBF got into trouble since he paid an old FTX investor, Changpeng Zhao in FTX’s native stablecoin token FTT. And when Zhao tried to cash out this token—which, again, was fake money created by FTX—it tipped over the first domino from which FTX never recovered.

But you don’t need to take advice from me. I’ve been skeptical of cryptocurrency for years and still believe it’s way overvalued. But I also thought it was overvalued back in 2019 when the price of bitcoin was $5,000. If you’d bought at that price five years ago and held onto it without selling, you’d have ten times your money today. The problem, which is identical to the problem of the stock market, is that you need to be able to time the market. Buy low and sell high, as the age-old saying goes.

Thiel buys low and sells high. But the public doesn’t learn about the timing until well after the fact. If history is any guide, the price of Bitcoin is likely to soar in the near future, just as it’s on a steady uptick right now, causing a lot of people to buy at the peak. That’s when guys like Thiel will sell, just before the next inevitable crash.

If you think you can time the market and make some money on crypto, good for you. Make your money. But as bitcoin’s price potentially inches ever closer to that all-time high of $69,000 achieved in late 2021, most people are going to be stuck buying Thiel’s overpriced bags and selling after another crash out of frustration. Thiel has probably already doubled his money with the current price of Bitcoin. And we won’t know for a long while when Thiel will exit his position. When the public does know, it will almost certainly be too late.