Sugarcane Podcast

The Crypto Roller Coaster | Volatility, Hypes, Whales, Scams | Ep. 08

August 29, 2023 Sugarcane Episode 8
Sugarcane Podcast
The Crypto Roller Coaster | Volatility, Hypes, Whales, Scams | Ep. 08
Show Notes Transcript Chapter Markers

In this episode of the Sugarcane Podcast, hosts Rudy and Sheldon candidly discuss the ups and downs of crypto volatility. From the wild fluctuations and market manipulation by "whales" to the evolution of money from bartering to digital finance, they explore the complexities of the crypto world. They also reflect on personal experiences in bull markets and share insights into the future stability of the industry. Tune in for an engaging and informative conversation that demystifies the roller coaster ride of crypto. 

πŸ’ƒπŸ•Ί The Dance of Volatility
πŸ³πŸ’Έ Market Manipulation: Whales and Scams
πŸšπŸ’³ The Evolution of Money

Links: πŸ”— Website - Podcast - YouTube - Twitter - Discord - TikTok

Disclaimer: 🚨 The information provided across all of Sugarcane's communication channels is for informational and entertainment purposes only. It should not be construed as financial or investment advice. Consult with a financial professional before making any investment decisions.

Rudy:

Welcome back from the episode of the Sugarcane podcast. I'm your host, rudy

Sheldon:

Ceo of Sugarcane.

Rudy:

And we're here to talk about the ups and downs, and ups and downs, and ups and downs, and ups and downs and ups and downs of crypto, constant volatility.

Sheldon:

It's like a disco, that's never stopped. It's a party that never ends.

Rudy:

It's like a roller coaster. It's going to be a richer ready and not have to worry about anything.

Sheldon:

Can I get off this ride?

Rudy:

I love that meme too, where like the roller coaster ride of like the zombies coming down and the new people going up into crypto, yeah, it's like welcome class of 2017, 2020.

Sheldon:

How do you wash that no?

Rudy:

Oh man. But yeah, it's a serious thing. Like crypto is constantly changing, going up and down prices, and it's exciting when it's up on a bull market. Yep, how do you deal with that emotionally? And how do you deal with that in terms of, as a new person, not really knowing what crypto is about and what to expect For sure?

Sheldon:

Like, what do you think? What was your?

Rudy:

first experience. My thing is what was your first experience in a bull market and what was going on through your mind?

Sheldon:

Yeah, actually, funny enough, I got started in 2016. So at that time it was right before what was called the ICO mania, ico boom, like subsequent bust, and at the time, like I think a theorem was around, like at the peak it was like a thousand bucks. So definitely not where we are now, because we're definitely not further along to 1800 to 2000 range, and so at the time people were really excited for tokens and so that was really when, like the ERC 20 token came out, we'll start like actually thinking about crypto as something you can build a token about and do something with. But a lot of kind of what they pleasantly refer to as shit coins came out at the time, like in 2017, yeah, 2017 to 2019, it was like a deep, deep bear market. Like no one was as excited. It was definitely a lot quieter. Nothing was really out yet, so people were just excited just for technology. That was kind of like all like in your head. Yeah, definitely darker days than we are today, so you know it's changed.

Rudy:

No, it's not easy, but I mean, yeah, same. For me it's like ICO is a big boom where I mean that's the thing with crypto self too. It's just people are finding a hype and pouring money into it Like big investors, big even financial institutions are pouring money that like billions of dollars the common day person pouring whatever amount they can put into it, just happening million times over. It's a lot of money adds up quickly. It's exponential. If everyone's putting money in, people from the previous timeline were like well, it's a good time to sell, it's a good time to sell and make their money and get out. That keeps happening. It's definitely not financial advice at all.

Rudy:

Yeah it's just, we haven't, yeah, not financial advice at all Because I have no idea what the right move is. I'm always bad at making calls, except that I love crypto and I think it's a future of money, so maybe that'll happen, but it's sponsored by hands. Yeah, for trading advice, go somewhere else. But yeah, explain more. Like how can it change so rapidly, so quickly, and it matter what months?

Sheldon:

Yeah, yeah, it's interesting because I think it's um cryptos unique in that like it is about finance and money some degree, and like people have an interesting relationship to finance where, like when it goes up, they get really excited and they get really exuberant and so that feeds into itself and everyone gets more and pumping more value into it. But when the actual like excitement doesn't meet, like on the ground reality of things that I should build or live, that people can use, like in day to day, there's a huge disparity, just big mismatch, and then things kind of kind of crash down and also on the way down, when things start to go down, they start to get really depressed about it and they sell more and that kind of feeds into like a also a bottoming cycle and kind of pick back up and cryptos been through a bunch of different cycles at this point. But like the interesting thing, like talking back again about 2017, the ICO boom and where all the tokens came out, it really led to like DeFi, like the actual concept of like decentralized finance, where there are actual ways to interact with new financial primitives, new financial services that are completely like self custodial, unbanked. You can actually interact directly with people, directly. And so the beauty of is that, like, even though there's like hype and like kind of sadness afterwards in those hype cycles, it brings a lot of people in and also brings a lot of developers in and they start building a lot of things that actually really have value.

Sheldon:

And it take a couple of years for it to be born out right, like from 2017 until what was called DeFi summer in 2020. So it was about three years between that gap, but it was a bear market. People actually had time. There was no hype. You actually build real things, and that's kind of what led to the next kind of upcycle of like now, people actually using real things and being around for technology, for the value that can create in their real life. So it's definitely like a excitement that leads to real building.

Rudy:

Yeah, and that's the thing too is during the bear market. It's also the best time to build. It's when people are having their quiet time. They're able to just focus on what they want to do help build their own product.

Rudy:

There's not that much noise going on kind of forcing them to move fast and kind of what we're doing now. It's kind of in the bear market and sure King is just building. Because when the bull market does come back, those projects that came out of seemingly nowhere that are boosting up, that's because they've been building and now they have something, a real product that's working in. The hype is coming in. People are pouring into the projects that they want to see grow. It's just, it's amazing to see, amazing to watch and the first cycle is always the hardest. But after you go through two or three, then like okay, so I've been here before.

Sheldon:

I've been here before. Look at this, this is bear marking, my old friend, you're back again.

Rudy:

And that's the thing too, is like there's also like intentional manipulation, the market to maybe not the entirety of the market but that's a dangers of like new coins or coins that don't have a lot of market cap, meaning the total value of that coins, valuations and the millions, maybe even less than a hundred thousands, a single individual can actually purchase all their coins or a lot of the coins and manipulate the price, which is what we call whales. So there's a whale, they have a lot of the currency or the whole lot of the currency, manipulate the price and then sell it because they know people are riding on that hope that it will keep going.

Sheldon:

Yeah, I think you actually should talk about like the difference between, like like, circulating supply and the fully diluted valuation, doing like kind of dive into what that means and how that matters, yeah.

Rudy:

So I guess Bitcoin is a good example, because a total Bitcoin that can ever exist is 21 million, but there isn't currently 21 million in the circling supply. The circulating supply is like 18, 17 million, something like that. So that's what's currently circulating in the market in terms of people are buying, trading and selling what's actively able to be used. Of course, there's some that's been burned away or tossed away in some trash can past, but that's what's available and that's something that also, I guess, keep in mind when you're looking at a market valuation, because that's the amount that's taken into consideration, what's circulating.

Sheldon:

So like definitely an appointment, like the fully diluted valuation. It's kind of like if me and you were in a room, right, and let's say there's a total amount of like 10 tokens somewhere, but like right now we only have one token and between you and I we're trading that token and we think it's like worth a dollar. So we're basically trading with each other. The total value of the overall market is $10 because there's actually 10 possible tokens out in the world, but we're just trading that $1. And that's kind of how much it's circulating.

Sheldon:

And if there's more demand for that one token that we have, let's say, the price now moves from $1 to $2, even though there's only one token floating between the couple of people that are actually in that room trading it, the total market cap is, deceptively, is worth $20. Now $20 as like a kind of hypothetical case. So like that's how people kind of play with the market, where they kind of produce the amount of tokens in circulation. So people are actually interacting and using. So it increases the demand for that small amount, but the total value is priced as though that token times the total amount. It looks like there's a lot larger market cap than what's actually available to be used and traded with. Kind of interesting like game people play in the crypto space.

Rudy:

It's pretty wild because it is such a mental gymnastics of how to use a manipulate money. That's why crypto is seen such like a wild west scam industry. It's because things like that do happen. They do exist. They do happen in any other market and have happened in traditional markets too. It's not like a new way of scamming. It's the same old ways of scamming with just different technology.

Sheldon:

now, Just new technology, yeah, yeah.

Rudy:

It's like people can still like ring your doorbell and sell you a scam product, just like as they just sell you scam products on Amazon. That happens everywhere. That's something to always watch out for. Even in traditional markets there are things that are very volatile. That we had the game stop stock that was pumping up out of net because people were manipulating that in itself, what was it? Because someone was just buying and holding, and there's a whole subreddit on like being diamond hands for those Wall Street bets.

Sheldon:

Wall Street has Navy.

Rudy:

I was just so surprised in how that was working and the only reason they did it was to stick it to the man who were trying to short game stop. I don't know if it saved them. Did it save the company I forgot?

Sheldon:

It's funny, there's a whole like also drama where the founder or not the founder, the CEO at the time eventually like end up, I think, issuing a bunch of shares and then sold them into the market and so he's able to like profit from the fact that there's a whole bunch of like hype cycle or game stop, but it wasn't actually like from the basis of the company.

Rudy:

Exactly, and that's always like a case right when, oh, there's no value behind crypto, so why is it having any value at all? Monetary value Game stop wasn't having much value as a company or more, because they were going down, but somehow there's like also went up and just shows it's not always necessarily the product, but the value that it actually provides. And my case you know. Bitcoin and Ethereum provide strong value. I can't speak much for other currencies, but for Ethereum itself, you know it's providing a decentralized finance world where anyone can interact with anybody in the world. You can have ownership over your art, music, NFTs, you can have type of your own voting rights, your own self sovereignty over your money. Yeah, it's all digital, but so is almost everything nowadays. It's all digital, Even stock market. Your money is all digital. There's not that much being handed and played around with physical cash anymore and if it is, yeah, that's also something that governments look at. It's like why do you have so much cash? Then it's always back and forth.

Rudy:

The real purpose of it is just having full control over what's yours.

Sheldon:

Yeah, it was just evolution of the financial industry, like moving from like where we bartered and actually traded physical things like I have a cow, you have two chickens, I'll trade my cow for your two chickens. That'd be a terrible trade, by the way, so I wouldn't do it. Yeah, two chickens. And so like, yeah, it's like using gold as like a medium exchange.

Sheldon:

Yeah, they're cheap in there, yeah, and then we went to like gold and then went to like physical, like dollars, like bank notes. If you're interested in like the banking industry, look at Wildcat banking. There's a huge like kind of craziness in the states about like Wildcat banking and how every state actually had their own like currency. They're trading kind of crazy time in history.

Sheldon:

And then from physical, like notes, into like credit cards, like how credit cards became a thing. That's also a pretty crazy story as well. And then now this whole emergence of like digital finance, where now you don't have to have a card or even a bank, you know own finance and own the money that you have and trade with it. A lot of volatility in all those cycles just goes to show that, like when your industry is always going to be hype cycles and especially with money, it's definitely a lot of like hype cycles and excitement and super selling.

Rudy:

Exactly, and the amount of resistance there was in each of those technological advancements, going from cash to checks, to credit cards, if I don't know how to remember this, but credit cards used to need to be swiped on the carbon paper where you just give them a, your card. Yeah swipe it they rum over.

Rudy:

Yeah, and that's that was the transaction. There was no instant verification that you actually had enough credit, so imagine the amount of scams that were going on back then. It was probably insane and people still went for it. I mean, now it's the most commonly used form of transaction. It's like a credit card, and now we have Apple Pay and Google Pay. Now we don't even need a physical card, we just give them our phones. And now the next step is crypto. But, of course, through every step is a high and low confusion, not sure on certainty, fear, and what the common term was was FUD, fud fear on certainty and doubt. Yeah, and that's what's happening during the volatile cycles is just not knowing what's really going on, why it's going on, and the excitement and fear of taking your money or losing your money is just insane. But yeah, it's not not for my fainthe part, I'm just a holder. Yeah, yeah, yeah and hope for better times.

Rudy:

I really, and I listen to the people, I trust online influencers, I trust online that provide, hopefully, good advice. Yeah, it's just kind of going over. The crypto market is just going through its phases of any new financial technological advancement. Yeah, and that's just how it's going to go from now until who knows when, and we expect every volatile movement to be a little bit less abrupt. So, and as you can see the charts, it's kind of less dramatic and exponential and more hopefully going into a stable environment.

Sheldon:

Yeah, I mean, as the space gets bigger and as there's more use cases and as there are other people who are actually interacting with it, there's more value in there. It'll be harder to move the market in that incremental percentage. And so, like again, as the space gets bigger, volatility will start to get smoothed out and wouldn't be as dramatic. But for now, in the small industry or small or industry, you definitely see those big swings. So things will take time to kind of level out.

Rudy:

Exactly. At a certain point, the whales can come in and just move the markets. It's not enough. There's too much liquidity, which is a good thing. Yeah yeah, for sure. That's the volatility of the crypto market. What's the last volatile words? Sheldon? Volatile words. It sounds so terrible. Now I don't think it volatile words.

Sheldon:

Now I don't think it's spicy to say.

Rudy:

Choose your words wisely. So we'll see everyone next week again for another awesome episode. We have more about the decentralization and, of course, crypto. Yeah, we're always here for any other questions and follow us. Subscribe, like all that fun jazz. We'll see you next week.

Sheldon:

For the tastiest of tidbits.

Rudy:

See ya.

Understanding the Volatility of Crypto Markets
Crypto Market Volatility and Hype Cycles