Recently, I've seen many novice investors discussing the topic of the crypto bubble, and I think it's necessary to have a good talk about this issue. Over the past ten years, the emergence of Bitcoin, Ethereum, and thousands of other coins has attracted the attention of countless retail investors and institutions. But along with that comes the unavoidable phenomenon—the price bubbles of crypto assets.

Speaking of bubbles, this thing has appeared many times in financial history. From the Dutch Tulip Mania in the 17th century, to the dot-com bubble in the 2000s, and now the crypto bubble, the patterns are actually quite similar. The problem is that bubbles often cause asset prices to soar to completely unreasonable heights, sustained mainly by hype, speculation, and the fear of missing out. I've seen too many beginners rush in at the peak prices, only to get trapped when the bubble bursts.

Actually, the crypto bubble is easy to understand—it's when the prices of crypto assets far exceed their true value, driven entirely by excessive speculation. In this situation, prices go up not because of real technological breakthroughs or practical applications, but purely due to hype and psychological factors. A typical bubble has several obvious features: prices skyrocket in a short period, everyone believes prices will keep rising, retail investors flood in, but the prices are completely disconnected from the fundamentals of the projects.

Why is it so easy for the crypto bubble to appear? I think there are a few main reasons. First, whenever new innovative concepts emerge in the crypto space, like ICOs, NFTs, or DeFi, everyone wants to catch this wave, resulting in a herd rush. Second is the FOMO psychology—seeing others make big money, many people start to fear missing out. Plus, the entry barrier for crypto is very low—just a phone and internet connection are enough to participate, making speculation extremely easy. There's also the fact that the market's regulation is still being improved, and many projects are just false fronts. Lastly, media and influencers play a big role in fueling the hype.

The two examples that left the deepest impression on me are the 2017 ICO frenzy and the 2021 NFT/DeFi boom. In 2017, almost every week there was a new ICO project launching, and many investors would throw money based on just a white paper. As a result, over 80% of the ICO projects in 2017 were later confirmed to be scams or complete failures. By 2021, NFTs and DeFi became the new darlings—NFTs like Bored Ape sold for sky-high prices, and DeFi tokens soared hundreds of times. But do you know what happened afterward? NFT prices plummeted, and many DeFi tokens lost over 90% of their value. That’s the real picture of the crypto bubble bursting.

So how can we spot a bubble early? I’ve summarized a few signals. First, if the price increase seems completely unreasonable, be alert. Second, project teams start to boast and promise huge returns. Third, a large number of ordinary people begin to enter the market, even your relatives and friends start asking how to buy coins. Fourth, media and influencers begin to hype wildly. Fifth, the token valuation clearly exceeds any reasonable calculation.

As investors, to avoid being harmed by such bubbles, my advice is this. First, do your own research—don't follow the crowd blindly. Second, focus on the fundamentals of the project, not short-term price movements. Third, diversify your investments—don't put all your eggs in one basket. Fourth, plan in advance when to exit. Fifth, choose reputable platforms for trading. Most importantly, don’t let FOMO control you.

Ultimately, the crypto bubble is just a natural market cycle phenomenon. History’s bubbles repeatedly teach us that not everything that glitters is gold. The ICO craze in 2017 and the NFT/DeFi frenzy in 2021 have given us profound lessons. As long as you conduct in-depth research, stay disciplined, and don’t get overwhelmed by market emotions, you can come out unscathed even if the bubble bursts. I now use some reliable trading platforms to track crypto prices, which helps me better understand the market in real time. The key is to approach each market opportunity rationally and not let greed ruin your investment plan.