I recently started thinking about something that has become a recurring pattern in the crypto world—price bubbles or what’s often called a crypto bubble. If you pay attention, this phenomenon isn’t just happening in crypto, but has repeated many times throughout financial history. From the Tulip Mania in the Netherlands hundreds of years ago, the dot-com bubble, to today with digital assets. But what makes the crypto bubble unique is its speed and the scale of retail investor participation.

So what exactly is a crypto bubble? In short, it’s a condition where the price of crypto assets skyrockets far above their fundamental value, not because of real developments in adoption or utility, but due to excessive speculation and hype. Its characteristics are easy to recognize: prices rise very sharply, investors believe prices will keep going up, many new people enter the market, but there’s no connection between the price increase and the project’s fundamentals.

I’ve noticed several reasons why a crypto bubble can happen. First, every time there’s a new innovation—whether it’s an ICO, NFT, or DeFi—people rush in without much thought. Second, the FOMO psychology is very strong. When you see others making big profits, many panic and fear missing out. Third, access to crypto is much easier compared to stocks or bonds—just need a smartphone and internet. Fourth, regulations are still not strict, so many scam projects can operate freely. Fifth, media and influencers have a big influence in shaping market narratives.

Looking at history, there are two classic examples worth remembering. The 2017 era was the golden age of ICOs—thousands of crypto projects appeared with tempting whitepapers but no real product. The result? Over 80% of those ICOs turned out to be scams or total failures. Then in 2021, another bubble happened but in a different form. NFTs like Bored Ape Yacht Club sold for incredible prices, and DeFi tokens jumped hundreds of percent. But as usual, when the bubble burst, NFT prices plummeted drastically and many DeFi tokens lost over 90% of their value.

Now the question is, how can we recognize a crypto bubble before it’s too late? Pay attention to a few things: first, unreasonable price increases—if prices go up 10x in a month without any fundamental news, that’s a red flag. Second, exaggerated promises from projects—claiming to be revolutionary without concrete proof. Third, many laypeople suddenly interested in entering the market. Fourth, media and influencers dominate the conversation. Fifth, valuations that are completely illogical.

So how do we avoid getting caught? I have some tips. First, always do thorough research before investing—don’t trust hype alone. Second, focus on the project’s fundamentals, not just the price. Third, diversify your portfolio so you don’t put all your eggs in one basket. Fourth, set an exit strategy before entering—know when you will sell if prices go up or down. Fifth, use trusted platforms for trading. Sixth, avoid FOMO—that’s the biggest enemy of investors.

In the end, a crypto bubble is a natural part of market cycles. But that doesn’t mean we have to be victims. With enough understanding of the signs of a crypto bubble, discipline in research, and not getting caught up in market euphoria, we can protect our investments. Remember, not everything that glitters is gold. The lessons from the 2017 ICO craze and the 2021 NFT/DeFi boom are clear: hype and fundamentals are two different things.