The Last Time This Happened: 2017's Crypto Bull Run

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Yes, a cryptocurrency designed as a joke — no doubt with the cutest mascot — has left every other asset in its dust. Sorry, value investors.

Dogecoin's performance even trounces Bitcoin's relatively shitty 98% gains.

Last September, I wrote an article about my greatest investment loss ever: a portfolio of nine coins from 2018 that was down 88.38%. Guess what — due to the recent bull market in crypto, I'm now up 6%.

Of course, if I had just invested that money into Bitcoin, I would have made over 350% gains. But I guess we're all young and dumb once.

Isn't this the dumbest bubble ever? When's the market going to crash? Nobody can tell for sure, but maybe looking back at 2017 can help us learn some cautionary lessons.

Between May 2020 to April 2021, Bitcoin has gone up roughly five times.

If you'd invested USD1,000, that'd be worth over USD6,000 now. In traditional finance, 500% gains in one year are enormous — some would consider it once-in-a-lifetime good fortune.

But of course, those gains are nothing compared to 2017. On 1 January 2017, the price of Bitcoin was USD964. It peaked in December the same year, almost reaching USD20,000.

As you can imagine, tons of individual investors started buying Bitcoin. That's to be expected — people have always loved speculating on new trends, whether it's railroads in the 1800s, or the Internet in the late 90s.

But Bitcoin wasn't enough.

Many people started creating their own coins through a process called Initial Coin Offerings (ICOs). And that's where the craziest shit happened in 2017. Why bother with Bitcoin and its shitty 20x gains, when you could get NXT and 1,265,555% return on investment (ROI). That's not a typo. If you'd gotten in and out at exactly the right times, theoretically that means you could turn one dollar into a million.

It was a hell of a party. While it lasted.

Remembering Quarter 4, 2017 — I can tell you what "I can't lose" feels like.

When everything you buy goes up, fast, you feel like a genius. Of course, it's highly likely you got your gains by dumb luck — a rising tide lifts all boats. But it's easier to pat yourself on the back, imagining you're the Warren Buffett of crypto.

Bull runs do that to you. Dreams of easy riches blind you to reality.

Here's a question on Quora from 2017 on XRP (commonly known as Ripple):

Now I own a bit of XRP myself, so this isn't a diss on XRP. But some of the Quora answers are ludicrous. USD/XRP10,000 implies the entire market capitalisation of XRP would be one quadrillion or USD1,000 trillion.

That's 500x the value of all crypto (approximately USD2 trillion), 100x the value of all gold (approximately USD10 trillion), or 3x all the wealth in the world (approximately USD360 trillion) today.

Will one cryptocurrency be worth 3x the world's wealth, including all properties, stock markets and government currencies? Probably not.

The scary thing about 2021 is I'm starting to see these kinds of questions and answers emerge again.

Back to 2017: Bitcoin finally peaked on 17 December. Some other coins held on for a few more weeks. Then, the market crashed.

By 5 February 2018, Bitcoin was down 65%. Ethereum lost 51%. They would take more than three years to recover.

Meanwhile, NXT lost an incredible 92% from its all-time high. It never recovered. Buy a thousand dollars of the wrong crypto, and you can turn it into 80 bucks.

Can't tell. You’ll only know it’s the top looking back after a crash.

And who knows, maybe this bull market continues for many more months. Some stock market analysts have been calling Tesla a bubble for years, but it's still marching on.

What I am saying is many of the behaviours I'm seeing today remind me of late 2017. In discussions on social media and private groups, people aren't even pretending to discuss technological innovation or market fit for coins anymore. It's sure as hell not fundamental or technical analysis.

Instead, it's humblebrag-sharing screenshots of 10,000% gains and 'What's the next price target for ABC new coin?' The 'Top Coins to GET RICH in 2021' videos are back too, complete with annoying facial expressions.

I'm gonna call it for what it is: gambling.

No moral judgement. Sure, gamble with a bit of fun money if you know how to limit your risk. But are people mistakenly gambling thinking they're investing?

Markets cannot go up forever. There will be corrections. And if history guides us, corrections in crypto are severe. We've already seen a warning shot when Bitcoin dipped from 65K to 49K recently.

What's your plan for the next crash?

Everyone thinks they can sell right at the top, and buy-in again at the bottom. But historically, most people get burnt trying to time the market.

If you believe in the crypto long-term, are doing financially well, and willing to stomach high volatility — consider dollar-cost-averaging into Bitcoin, the blue-chip of crypto. That's probably optimal for most crypto investors.

Of course, do your own research, and be sceptical of specific financial advice, except maybe from your trusted financial planner. Even well-meaning friends and family may sometimes try to shill you ambitious new coins or tell you exactly when to buy or exactly what to sell. Be careful. We've seen this before, and it didn't end well.

When I look at what's happening in 2021 that reminds me of late 2017, Mark Twain's quote often comes to mind: "History doesn't repeat itself but it often rhymes."