Understanding Market Cycles - Sports Cards and Cryptocurrency
I’ve been sitting pretty quiet lately, observing what has been going on in the sports card market this past year. A little about myself - I’ve been actively trading crypto the past 6 years, so have been through the trenches first hand with a hot emerging market. I made a TON of money in the market, but that wasn’t before I lost a ton of money. The similarities I see between the sports card and crypto market are remarkable. Luckily, a sports card bear market is only seasonal.
In 2017, when Bitcoin went parabolic, all you would hear is “the bubble will burst soon!” Sound familiar? Since crypto has gone semi-mainstream, I’m going to make comparisons to coins that some of you may know. Let’s start with basketball. This is the blue chip investment that moves the market ie Bitcoin.
In crypto, Bitcoin kicks off the market cycle, and when it cools, alt-coins follow. Basketball went on an absolute TEAR this past year (with a healthy correction in between), but we have been seeing a steady decline in prices these past months. This puts us at the Bitcoin peak of $20k. Baseball started to heat up and took the lead, and there we have Ethereum. Once Ethereum moves, market share starts leaving Bitcoin. Football then starts to move; we’ll compare this to XRP. Hockey jumps in – Litecoin. Then we have all these crazy Tweets from influencers saying BUY DOGE (Soccer), SafeMoonCoin (F1), SHIBA INU (UFC), and market share continues to be depleted from Bitcoin, all the while it looks to find a new floor.
The market starts panicking and we hear these joyful cries from afar; “the bubble has bursted, the bubble has bursted! I told you it would happen!!!” This background noise comes mainly from disgruntled 50+ year old men who could once buy their favorite cards for pennies on the dollar before everyone else got in on the fun. Many of these famished patreons supposedly sold at the top, but now have no cards left to collect, and refuse to pay the absurd prices they are today, so they do everything in their power to spread FUD (Fear, Uncertainty, Doubt.) We can compare this to traditional hedge fund, stock investors ie Warren Buffet, Peter Schiff etc who just simply missed the boat and talk endless smack about the asset class. You were once a visionary, now you’re a dinosaur.
More unseasoned newbies who have never invested a dime into financial markets start chiming in with a million different excuses why it happened – “the world is getting back to normal (China is banning Bitcoin)… they’re spending their money on vacation rather than investing in cardboard (the IRS is cracking down)… it’s all PSA’s fault! (Bitcoin energy usage crisis)…” when the truth of the matter is, investors just got greedier and went on the hunt for the next big thing ie F1, Soccer, UFC, TMNT, Jay-Z and Punky Brewster autographed cards. Their money transitioned out of blue chip investments into alt investments.
Out of all the nonsense I’ve heard over the past few months, there are a couple valid claims. Card shows are taking away volume from eBay, which is where the hobby gets its comps from. This is definitely something to note. Another thing to realize is that we have had no clear favorite leading the market to win the title this year. The shortened schedule and back 2 back games have plagued the league with injuries. Almost every superstar was taken out this season. Lebron, AD, Durant, Harden, Embiid, Mitchell, the list goes on. The NBA will readjust the schedule next year, and we won’t fall victim to this again.
Now let’s combine the loss in market share, with all the FUD everyone is spreading, and you have self-fulfilled your prophecy, giving the hobby the perfect storm for a market RESET. Everyone is now sad, many have sold their homes for a loss, but the dust is settling. Meanwhile, no one has really left the hobby, rather just sitting on the sidelines for a time-out to see what happens next. We all know, once you got the fever, there’s only one cure, and that’s more cowbell!!! When the market starts pumping again, they’ll all buy the top, cause there’s no stopping us now baby!
Eventually everyone gets tired of these alternative investments, many realizing how ridiculous they are after they made their money, and Bitcoin levels out. Influencers realize once again what the real blue chip investment is – BASKETBALL. Money then starts to leave the alt markets, and poor back into the King. Many of the alts that once sucked money out of Bitcoin become obsolete, never to be heard of again. The seasoned vets (Baseball, Football, Hockey) however will remain, but they themselves go through a market correction. $65k here we come! Rinse, repeat, C U Next Tuesday Sally!
