There’s a troubling cultural trend around cryptocurrency, one that encourages retail investors to “ape into” the market in search of riches.
In one recent example, Blockfolio, a crypto-trading and portfolio-tracking mobile app, kicked off an ad campaign with the call to action to buy now. The slogan: “There’s a price to waiting, especially when it comes to crypto.” Then there are the celebrity endorsements, paid and unpaid.
This article is excerpted from The Node, CoinDesk’s daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
There isn’t just one factor that drives a bull run, but statements that glorify greed or promote the fear of missing out (FOMO) contribute to turning a bottom-up revolution into a directionless stampede.
According to a survey conducted in May, during the height of the recent market run-up, over one-third of retail crypto investors in the U.K. said their knowledge of the asset class was “poor” or “non-existent.” One in five said they lacked an understanding even after they invested in crypto.
The survey was conducted by Oxford Risk, a financial services firm, which found that a significant portion of investors were driven by FOMO. Many were persuaded by media coverage of outsized gains or by word of mouth.
Crypto isn’t alone in attracting people to invest with reckless abandon. Over the lockdown year we saw the rise of meme stocks and dog tokens alike. Platforms designed to lower the barrier to investing – “democratize finance,” to use Robinhood’s lingo – did just that.
It’s all part of a trend towards narrative-driven finance, focused on the stories that projects and companies can sell rather than their fundamentals. Some call this moment “financial nihilism,” the idea that everything is rigged so you might as well capitalize. Others advance the “boredom markets hypothesis,” that people cooped up during the coronavirus pandemic are seeking a diversion.
Crypto has a powerful story, and the potential to effect real change. Removing gatekeepers and opening access to financial services is a move in the right direction, for many. In this sense it’s less of an asset class than a tool. Censorship resistance isn’t just a story. Neither is supporting a new class of digital artists.
But crypto will not be a tool to become ultra-rich for many, or even for most. Promulgating that idea is hazardous, but it’s also one of the stories that is most often told about crypto.
Spike Lee recently directed and starred in a commercial for bitcoin ATM firm Coin Cloud, where he called crypto a “digital rebellion.” An ad executive who watched the clip was quoted in the New York Times:
“I get very nervous because I start looking at the way that some of the platforms are specifically targeting younger investors.” … Maximizing is what’s being encouraged here – the idea that this is an amazing asset, and as much as you want to put in, come on and jump on in, the bitcoin’s lovely. … We would never feel comfortable for an alcohol client, or a high-salt or high-sugar or high-fat client, to encourage that level of unequivocal behavior.”
That said maybe “mass adoption” always meant endorsements and commercials. Either way, if crypto just caught your eye and you’re looking to stay safe, here’s a short guide.