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The Crypto Bubble: Is it Real? (and How to Protect Yourself)

Anthony Cerullo
January 6, 2021
Bitcoin, Ethereum and other coins sit inside a bubble about to burst.

Well, what can one say about this recent cryptocurrency market bull run? With Bitcoin leading the charge, investors all over the world are left speechless as they watch their portfolios skyrocket to unexplored territory. For many, it may be easy to crack open a bottle of champagne and put the downpayment on that brand new Lambo but for the intelligent investor, there is reasonable cause for concern.

The keyword of the day is “crypto bubble.” Are we in one right now and if so, when is it going to burst? Are we all just gambling with time and getting greedy? When should we exit the market and protect our investment? Again, these are all very logical questions and the answers will be addressed in this very article. By the end, you should have some clear direction on how to handle the crypto market from here on out. Let’s get started. 

The great debate: is crypto a bubble?

The 2017 bubble and subsequent collapse. Will history repeat itself?


Crypto bears love to point out 2017 when debating the topic “is crypto a bubble?” For those in the space back then, we saw popular cryptocurrencies like Bitcoin and Ethereum rapidly skyrocket to their then all-time highs only to come crashing down just as fast as it rose. Understandably, many investors experienced some post-traumatic stress disorder from that event, and with the market on a more powerful rise in 2020, many people are starting to realize if history will repeat itself. 

2017 was certainly a bubble since the value of these cryptocurrencies was based on media frenzy, hype, and the ICO craze of the time. This time around though, we have a different story. Even though crypto is extremely volatile this year, with Bitcoin rising up past the $30,000 mark for the first time ever, the bull run today is much healthier than that of 2017 for several reasons such as:

Institutional investment - Thanks to the Grayscale Bitcoin Trust, PayPal, Fidelity, and more, institutional investment in the industry is at an all-time high and shows no signs of slowing down.


Mainstream media is playing a minor role - Unlike 2017, the mainstream media is not too focused on the bull run this time. They have larger issues to deal with and what minor media attention the market does receive has a minimal impact on the price of digital assets.

Inflation - Due to central banks and governments printing money at rapid rates for Covid-19 stimulus packages, global citizens are beginning to fear fiat currency inflation and are starting to invest their money in assets with a finite supply.

Retail investors - After a long wait, retail investors are finally starting to enter the market and see crypto as a revolutionary transaction tool for their businesses. 

The perpetual motion machine explained

Ok, so if we’re not in a crypto bubble, then what is it? Ladies and gentlemen, please introduce yourself to the perpetual motion machine. In the world of physics, a perpetual motion machine is one that works on it’s own and works forever using perpetual motion. The current crypto market can also be compared to a perpetual machine due to the two types of customers that exist within it. 

Crypto veterans vs. Crypto newbies

Firstly, we have crypto veterans. These crypto veterans are wise, old sages that have seen their portfolio rise and fall so many times they lost count. Eventually, they learned to stop panicking so much and follow one simple strategy. Buying the dip. Of course, it also takes some faith in the technology to trust the market will go back up again after the dip and crypto veterans have plenty of faith.

Now, the second group consists of crypto newbies. Everytime the market grows a bit and the mainstream media starts to cover it, we see newbies flood the market. These people generally don’t care about the underlying technology or the current price of Bitcoin. They just want to buy crypto and buy it fast. They have severe anxiety of missing out so they buy in and wait for the best. Then, when a correction comes, they panic.

Crypto newbies love panicking in a correction and will often sell their crypto as a result. Little do they know, they are playing right into the hands of the crypto veterans who have been sitting patiently, waiting for the next dip so they can scoop up some of their favorite crypto for cheap.

Eventually, these crypto newbies learn their lesson and join the ranks of the crypto veterans, with more crypto newbies coming in to take their place. This is the perpetual motion machine. A self-fulfilling system that is growing stronger every day. So for those worried whether the next correction may be the one that never recovers, just remember this logic. 

Fear, uncertainty, and doubt (FUD): should we be afraid?

As with every bull run, there is always a healthy mix of fear, uncertainty, and doubt (FUD) or fear of missing out (FOMO). The key is to not buy into either one too much. One must not be overly optimistic. There are certainly a fair share of challenges the crypto industry must face if we don’t want this to be a one-time crypto bubble. 

For example, government intervention. Just last month, Coinbase had to shut down their margin trading branch due to new government regulations. The SEC in the USA also damaged Ripple’s value severely after essentially declaring XRP an illegal security. 

News like this is a constant reminder that governments all around the world are trying to regulate everything about crypto which may hinder its rapid growth. However, we here at YouHodler are confident blockchain technology will prevail and have a major impact on industries worldwide. However, it’s possible that from now until then, there will be serious moments of extreme volatility. 

Thankfully, the YouHodler platform has all the right tools to help you weather the storms and come out on top. 

YouHodler can help bears afraid of the crypto bubble

Whether you are a bull who sees the sky as the limit for cryptocurrency or you’re a bear who is just waiting for the crypto bubble to burst and everything to come crashing down, we have the tools you need right on YouHodler. Let’s start with the worrisome bears.

We know the type. These people look at their pumping portfolios and don’t get excited. Instead, they get nervous, fearing the market will burst any moment now and they will watch their entire portfolio shrink to almost zero like it did in 2017. If this is you, we have a solution. 

Savings Accounts - YouHodler’s crypto wallets have high yield earning capability. You can earn up to 12% on stablecoins and other cryptocurrencies simply by holding them on our platform. So if you have $100,000 tied up in Bitcoin and are afraid of the volatility, simply exchange it for a stablecoin like USD Coin (USDC). Then, you’ll hedge your investment in the event of a market collapse while simultaneously earning 12% compounding interest each year. 

Multi HODL - Another great tool for the bulls is Multi HODL. By choosing the “Down” direction in Multi HODL, you can open up a short position and actually profit whenever the market decreases in value. Suddenly, that crash doesn’t seem so bad anymore, does it?

Paxos Gold - Gold is the ultimate hedge. It’s a finite supply and stable value make it a highly attractive investment for those looking to escape market volatility. Paxos Gold (PAXG) from the Paxos Trust company is a form of digital gold kept on the blockchain. It is all fully backed by real gold bullions just without all the weight and inconvenience. It’s the same as owning real gold, meaning you get all the great benefits of that investment. Furthermore, YouHodler offers PAXG savings accounts where you can earn 8.2% compounding interest on gold

Now, if you’re someone who is a little more optimistic about the future of Bitcoin and cryptocurrency in general, then YouHodler also has several tools to help you maximize your investment. 

How to make this a bull run one to remember

In a volatile market such as this current one, it’s easy to sit back, relax, and be a passive HODLer who can generate big profits without lifting a finger. While that’s great, why leave extra money on the table? If you’re confident the market will keep rising, then try some of these features to help you become an active HODLer instead:

Crypto backed loans: The concept is simple. Use your crypto as collateral for a cash loan to buy more crypto. Later, when your collateral increases in value, you will profit enough to cover the interest of the loan and perhaps even more. It’s a quick and easy way to buy more crypto without spending your hard-earned cash.

Turbocharge Loans: If you want to take the aforementioned strategy to the next level, then Turbocharge Loans are for you. This is an automated tool we created that lets you take up to 10 loans instantly for the purpose of buying more crypto and multiplying your collateral. This is perfect for someone who wants large amounts of crypto with limited starting capital.

Multi HODL: Multi HODL lets you long or short the market via the “up” and “down” buttons. Since you’re a bull, the “up” button is for you. Just choose a crypto multiply (e.g. BTC), and a multiplier amount (up to x30). Then, if the market goes in the direction you chose, you’ll profit. In our most recent Multi HODL contest, the winner profited 294% from his deal (and also won a brand new iPhone as a result). That could be you next. 

The crypto bubble is nothing to be afraid of

While the debate continues on whether we are actually in a crypto bubble or not, YouHodler is here to say “don’t worry.” Regardless of the outcome, we have the tools to help you succeed. 

CLICK HERE to start your journey to becoming an Active HODLer today

About the Author
YouHodler Blog Editor

Senior Content Manager/Editor of the YouHodler blog. Connect with him about writing techniques, cryptocurrency, and music.

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