The Crypto Bubble Will Go Bust
A few months ago, my wife suggested that we watch a movie called "Boom Bust Boom." Given my complete lack of excitement for anything related to the financial markets in the past 18 months or so, I was reluctant to sign on for anything like that. However, the puppets and singing were quite entertaining.
The general premise is true. Humans tend to forget and fall back into the same patterns again and again. In finance, the pulsating levels of fear and greed move asset prices, without regard to intrinsic value. When greed is rampant, fear is almost non-existent and the opposite is also true. If one was able to measure the collective adrenaline, cortisol, endorphins, and dopamine of investors, they might be able to accurately predict a market cycle. (That's a discussion for another day perhaps.)
In modern financial markets, fear can most quickly and easily be measured as high volatility.
While low volatility is not quite the absence of fear, it is likely correlated. By logic, the absence of fear in financial markets indicates high levels of greed.
Not convinced?
Hyman Minsky posited that economic stability is not only inevitably followed by a period of instability, it creates that instability. In this case, low volatility and extremely consistent returns in equity markets are symptoms of an extremely stable economy. Other symptoms include low unemployment and rising asset prices. Eventually, we will reach the Minsky Moment where the cycle turns.