How to spot a cryptocurrency bubble

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Am really happy to post in this wonderful community pussifi I hope to continue to do so and I will like to share my post here about how to spot a cryptocurrency bubble.

Most times we find ourselves invested in a coin that is a bubble or a coin that maybe really doing well but is greatly overvalued, when a coin is experiencing sudden increments in price for not just reason and being over valued then that coin is described as a bubble waiting to pop.

So sometimes we might not really be able to identify this coins that are bubble as we might only want to see what we want to that's a coin appreciating really well without knowing the cause for it, well to spot a cryptocurrency bubble then we must be someone who pays careful attention to details because sometimes the details may be eluding even for one who has been here for long.

So today I will like to share some of the ways one can spot a cryptocurrency bubble because there are signs to know that a coin is a bubble and knowing this signs would help ensure that things are not obscure to us.

key factors to consider in determining a crypto bubble

Rapid Price Increases

Bubble coins often experience rapid increase in price and true these may also happen to good projects but for a bubble coin we find out that these price increments for the most part are usually sharp and continuous with little or no retracement at all whatsoever.

These exponential growth alone is not the problem but the main issue lies in that there is no basis for it, no clear reason as to why it's pumping, when a coin explodes or experience sudden price increments to form a vertical chart so to speak without any underlying reasons that's one of the way we can spot a coin that's a bubble as these growth is not in any way due to the underlying fundamental value of the asset or any other thing maybe just hypes in which case it could be set for a sudden crash.

So when these happens the charts of such coins are really parabolic in nature but at the end of the day we discover that the rise in price is not sustainable.

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Massive Media Hype and FOMO (Fear of Missing Out)

These is another thing that shows us for the most part if a coin is a bubble or not, as most bubble cryptocurrency coin are often as a result of media hypes and speculations. Watch out for coins without any underlying value and yet they are gaining much traction from the media and it's almost as if there is a surge in the way medias are covering this coin then this could be sign of a bubble coin too.

These media speculation often drives price up in that it leads to their audience out of fear of missing out of what would be the next big thing as they have been led to believe to jump into this investment without proper fundamental analysis of the coin they are investing in, that would suggest an investment that's not sound and logic defying.

Most times we see people who don't know much about cryptocurrency, celebrities and social media influencers hyping up projects for no just cause please watch out for such coin is a potential bubble as any growth would be out of hype and not based on fundamental value.

Unrealistic Promises and Speculation

Also another clear sign of a bubble cryptocurrency is one that makes promises which are crazy or unrealistic, some projects even from there roadmap and everything we see promises of great returns to the investors and yet this project seem to lack any real executional plan then you should really be afraid of such token for their promises are too good to be true.

When a project makes promises that are hugely unrealistic it could be due to the fact there are just basing everything on hypes and speculations and thats something that isn't sustainable in the long run and sometimes too we could spot a bubble coin from the market cap as some projects tend to have a hugely overvalued market capitalization.

We can look at the value of a coin then compare it to the market cap and we see that the market cap is kind of really high especially if we look into the utility of that project coupled with it adoption and even network activity so to speak, if it's not balanced or matching up and the market cap seems to be way higher for what it seems to offer then we must avoid such project something is fishy.

Increased Retail Investor Participation

Also another sign to spot a bubble coin is the kind of investors it attract, whenever it seems that most people who are don't really know much about cryptocurrency they start talking about investing in a coin or investing in a coin just out of a preconceived idea of cryptocurrency making them rich as they see their friends doing so out of fear of missing out then we must really be wary signs are we the coin is about to pop.

New investors flocking in to the market especially those that really don't know any thing or much about cryptocurrency only that they could double their money in with coin as they see it's been rising and trending for long that could also be a signal for a bubble coin then we will see the number of people signing up for wallet creation and exchange registration would sky rocket that would be a good time to sell if you even invested in the place.

So increased retail participation especially novice retail investors flocking into a project that would be a prospective sign of a coin or cryptocurrency that is a bubble and we should watch out for these.

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Conclusion

These are some ways I believe we can spot a bubble in the cryptocurrency market so we should take care so as not to fall prey to this especially if we have to be the one holding the bag after the bubble pops then it would have been wise if we hadn't gotten in to begin with.