The Wacky Excesses of the Crypto Market Make a Comeback
Recently, there has been a resurgence of bizarre and speculative activities in the crypto market. An image of a pet rock sold for over $200,000 in the non-fungible token (NFT) market, while the market capitalization of Pepe, a meme coin based on a cartoon frog, doubled in just a few weeks. Even tokens like FTT, which have no real utility, have seen their prices triple. It seems that the wacky excesses of the crypto market are making an unlikely comeback, driven by fear of missing out.
A Revival After Crypto Winter
The revival of digital junk comes after a nearly two-year-long crypto winter. During this period, many dubious projects lost value and were deemed illegal by the Securities and Exchange Commission. However, it appears that this cleansing was only temporary.
Investing Without Understanding
As prices rise, many investors are tempted to jump into the market without fully understanding what they’re investing in. This violates the number-one rule of investment: understanding your investment. Putting money into an undiversified bet on a single token is another common mistake made by investors.
Meme Coins and Their Lack of Value
Social media is once again filled with hype around meme coins. One example is Memecoin, which has seen a surge in value despite having no functions, utility, intrinsic value, or promise of financial return. The whitepaper for Memecoin acknowledges its lack of substance and highlights its speculative nature.
The Return of Expensive NFTs
Static images tied to Ethereum and Bitcoin blockchains are selling for high prices once again. Bitcoin Rock #75 recently sold for almost three Bitcoin, or about $112,900. However, these collections are held by a small group of people and lack liquidity. Additionally, projects selling NFT land inside digital territories of games are emerging, despite past experiences of participants getting burned.
The Risk of Scams
Amid the rush into hot tokens, some buyers end up falling victim to scams where the creators disappear along with liquidity. Rug pulls, as these scams are known, accounted for the majority of attacks in the crypto market in the third quarter.
Hot Take: The Crypto Spring or More Nonsense?
The current surge in speculative investments and enthusiasm in the crypto market could be described as a mini bull market. While this may inflate the prices of projects with limited long-term value, it remains to be seen if this is the start of a genuine crypto spring or just another wave of nonsense that will fade away.
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