Crypto
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    21192.4 -1.07%
  • ETH
    1216.01 -1.51%
  • SOL
    39.98 -4.79%
  • ADA
    0.5 1.02%
  • AVAX
    20.21 -4.17%
  • DOT
    7.97 -1.39%
  • LTC
    57.78 -1.09%
  • BCH
    114.7 0.68%
  • DOGE
    0.07 7.28%
  • CRO
    0.13 -0.78%
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    0.58 -2.76%
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    6.92 -3.98%
  • UNI
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  • SHIB
    0 -1.78%

Exponential growth can be punished

Today’s article will analyse one very specific event that is mostly connected to the cryptocurrency world – exponential growth.

Exponential growth is an event or development in the market, in which the given underlying asset shoots up in the price significantly in a short period of time. Here are some examples, where and when that occurred and also what followed next.

Crypto.com (CRO/USDT)

TradingView Chart

1D chart of CRO/USDT from the end of 2021, Source: Author’s analysis, tradingview.com

This chart is showing an exponential increase in the price of CRO that happened at the end of last year. During that time, CRO increased from 0.18 USDT to 0.98 USDT in a matter of days. As we can see, the whole chart went straight up, thus being in an exponential growth. This is very common in the world of cryptocurrencies.

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When this happens, many investors will start to follow CRO (or other assets in exponential) more and in many cases will start buying. They will do that to profit from the rise. Yet, vast majority of newcomers, retail investors or inexperienced traders will jump in too late.

This exhibits a problem, since every pump will end and the chart will return to its mean at its best. Sometimes it will even return to the price or a level, where the pump started. It can take few hours, days, weeks or even months, but this unspoken rule is true for 99.9% of the cases.

Did it happen for CRO? Well, see for yourselves:

TradingView Chart

Current 1D chart of CRO/USDT, Source: Author’s analysis, tradingview.com

MANA doing the same

Metaverse was huge at the end of the last year. The hype around those coins and tokens was real and the announcement of META only added a fuel to the fire. This could be seen through many Metaverse tokens, such as Decentraland (MANA).

TradingView Chart

1D chart of MANA/USDT from the end of 2021, Source: Author’s analysis, tradingview.com

The beginning of this pump can be backdated to 28th of October in 2021. After that, incredible rise started and MANA increased from 0.75 USDT to 5.92 USDT. But the end is the same as we have seen before.

TradingView Chart

Current 1D chart of MANA/USDT, Source: Author’s analysis, tradingview.com

Bitcoin doing the same

We have seen all of this many times before. For instance, Bitcoin, the biggest cryptocurrency, is not different than others when it comes to exponential growth. It did the same in 2017 during its bull market. The whole exponential growth ended up returning to almost the same place, where it started.

TradingView Chart

1D chart of Bitcoin, Source: Author’s analysis, tradingview.com

Conclusion

This is a very common event that should stop you from entering into a position when you see this type of chart.

Jakub is a crypto trader and founder of Trader 2.0 project, which helps hundreds of traders from central Europe to understand cryptocurrency trading and its challenges. Jakub not o...

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