Original Author: Matti
Original Translation: Luffy, Foresight News
This is a story woven from mythology, legends, and historical analogies, rather than derived from first principles. Throughout my writing, I have applied René Girard's scapegoat theory to the cryptocurrency realm, and I suggest familiarizing yourself with his theoretical framework before delving deeper.
Rationality tells me that as the crypto industry matures, viewing it through a traditional cyclical perspective is outdated. However, deeply influenced by Girard's theory, I cannot escape the mythical patterns that continually emerge. When you have a hammer in hand, everything looks like a nail.
In this article, I will explore how crypto bull markets unfold in two acts: the first act is an episode of "mimetic crisis," followed by the second act, which ultimately concludes with a "sacrificial crisis."
The first act begins with a price surge that generates mimetic desire across the entire community. The subsequent price crash causes chaos and conflict, which can be described as a symbolic "everyone for themselves" situation, where internal conflicts consume the entire crypto community.
The second act resolves the crisis of the first act through another price surge, thereby ending the cycle and finding the ultimate scapegoat. Each cycle ends due to the over-development of its fundamental principles, and each cycle has a scapegoat.
This reveals both a cyclical nature (this time is not really different) and a linear developmental process (this time is actually somewhat different). In the end, we always find ourselves in a new landscape.
The collapse of Initial Coin Offerings (ICO) left Ethereum in desolation, while the DeFi summer's revelry brought it back to life. The DeFi summer raised doubts about Bitcoin's potential as a financialized asset, but Microstrategy and BlackRock restored confidence.
The 2017 bull market was driven by Ethereum's ICO. The "world computer" became a slot machine. As ICO projects cashed out their Ethereum, this "computer" self-destructed until the 2020 DeFi boom revived it, ultimately ending with the collapse of over-leveraged speculators like Three Arrows Capital and SBF. The 2017 scapegoat was less individualized but still real.
In 2017, Ethereum's ICO projects were both the source of prosperity and decline; the heroes of the 2021 DeFi summer experienced the same trajectory. The best scapegoats are those who initially brought wealth and revelry, such as the wealth from Ethereum's ICO or the crazy DeFi lending and token issuance, where participants became millionaires simply by participating, but ultimately became the cause of decline.
Bubbles are a side effect of mimesis
The bull markets of 2017 and 2021 were clearly divided into two acts with a striking similarity: significant price drops occurred in the summers of both years. These episodes (brief but intense periods of decline) interrupted the initial price surge, yet in the second act, this momentum reignited with the same enthusiasm, driven by new market leaders.
Escalation of Mimetic Conflict
In these episodes, without a scapegoat emerging, mimetic conflict turned inward. Those familiar with Girard's theory know that this "everyone for themselves" chaotic situation is unsustainable; the search for a scapegoat will later serve as a purification mechanism. But until then, conflicts will continue to escalate.
In 2017, the ICO boom and Bitcoin's scaling challenges triggered a price crash in early summer: Bitcoin dropped from $2,700 to below $2,000, and Ethereum from $400 to $150, sparking collective conflict. The SegWit dispute created divisions among Bitcoin community members over block size, and Bitcoin Cash's (BCH) fork further deepened this split.
As the Ethereum ICO bubble burst, users and developers blamed each other, and the Ethereum Foundation was accused of being the root cause of network congestion and fraud. The conflict between Ethereum Classic (ETC) and Ethereum (ETH) erupted, with ETC advocating a "pure" vision and its price surging 10-fold between June and August, while fee disputes between miners and users further fragmented the community.
In 2021, a similar pattern emerged after the May price crash. Bitcoin dropped from $64,000 to $30,000, and Ethereum from over $4,000 to $1,700, triggered by Elon Musk's criticism of Bitcoin and China's regulatory crackdown.
Conflicts erupted in more complex scenarios: Ethereum's gas fee issues sparked scaling debates between L1 and L2 camps; the Bitcoin mining council created divisions between purists and pragmatists; the collapse of DeFi liquidity mining projects (like Iron Finance) pitted speculators against each other; and negative rumors about Tether intensified competition among stablecoins.
Second Act
From Girard's theoretical perspective, these episodes are turning points: the dominant participants in the first act collapse due to unsustainable over-prosperity, triggering internal conflicts until the second act redirects people's desires toward new assets, thus postponing the final sacrificial crisis.
In 2017, the first act was led by Ethereum and ICO projects. By June, Ethereum's price surged from $8 to $400, driven by token sale projects like Bancor and Tezos, while Bitcoin's performance was somewhat lackluster. In the second act following the episode, Bitcoin's price soared to $20,000 due to retail investors' FOMO, with Bitcoin Cash (peaking at $4,000) and EOS, dubbed the "Ethereum killer," also joining the rise.
The first act belonged to Ethereum and ICO; the second act was dominated by Bitcoin.
In 2021, the first act's protagonists were Bitcoin, Ethereum, and DeFi blue-chip projects like Aave and Uniswap, which gradually developed into "institutional-grade" assets. In the second act following the episode, market attention shifted to LUNA's rapid rise, OlympusDAO's (3,3) staking craze, Solana reaching $260, and the rise of Avalanche (AVAX), Polkadot (DOT), and meme tokens (Doge, SHIB).
The first act belonged to Bitcoin, Ethereum, and DeFi blue-chip projects; the second act belonged to LUNA, OlympusDAO fork projects, Solana, and the broader Altcoin rally.
Original Sin
Unlike the technological innovations represented by ICO in 2017 and DeFi in 2021, the fundamental driver of this cycle is institutional adoption. This top-down transformation is powered by Bitcoin spot ETF and MicroStrategy's funding. However, all cycles share a common financial engineering thread: global capital collaboration in 2017, on-chain yields in 2020, and institutional access in 2024.
Although the pursuit of MEME tokens may distract observers, it is merely a lure, just like Non-Fungible Tokens in the previous cycle. This is a small cycle within a larger cycle. However, it plays a crucial role in revealing people's rejection of grand ambitions: price has become both a means and an end, which is the last attempt to escape before institutions completely control the situation and fraud becomes the exclusive domain of white-collar workers.
Institutions have entered the market. This is no longer an empty talk of the Enterprise Ethereum Alliance in 2017, but the reality of 2024, with the Bitcoin spot ETF launched on January 11th. Donald Trump's election as president, promising to make the United States a crypto superpower, marks a significant step forward for cryptocurrencies. By November 2024, the crypto market was in a frenzy, Wall Street had entered, strategic reserves seemed imminent, and a stablecoin bill hinted at a new form of dollarization.
However, Trump's inauguration in January 2025 brought anxiety. Amid negative rumors of trade wars and macroeconomic turbulence, expectations of government intervention in the market like a deity were dashed. The crypto community realized that Trump, as a top influencer, destroyed the market with his own MEME token, suddenly ending the MEME token's super cycle. The first act ended, with the community hoping for institutions to save them, but no scapegoat was yet in sight.
Before the Second Act, the Bottom Has Not Yet Arrived
It is now March 2025, and we are in the interlude of the first act, with Bitcoin price dropping from its high point, and the entire Altcoin market severely impacted. The reason this interlude may spiral out of control is that people truly believe everything is over. Conflicts escalate, the community falls into chaos, but no scapegoat has appeared.
History suggests that the second act often triggers a crazy price surge, redirecting people's desires and postponing the crisis of sacrifice. However, this does not mean prices will necessarily skyrocket. The question is, who will we blame when the over-development adopted by institutions ultimately becomes unsustainable.
The scapegoat will inevitably come from the institutions that brought hope to this cycle. Will it be a vague, collective cry - "institutions have strangled the crypto market" - pointing fingers at BlackRock's ETF empire, or those anonymous suit-wearers who will anonymize our resistance to the dollar?
Or will it be more specific and personalized? Will MicroStrategy collapse, with its $40 billion Bitcoin bet vanishing in a spectacular leverage collapse, making Michael Saylor the ultimate speculative king - once praised for his vision, now becoming a sacrifice for our mistakes? Perhaps Trump, who used MEME token hype to abandon us, will also become a target.
This is not the bottom, at least not yet. Mimetic chaos continues, and the second act is about to arrive. Whether it will bring a crazy surge followed by a deeper abyss, as in the past, remains to be seen.
One thing is certain: the scapegoat is about to appear, and it will likely be wearing a suit. If it is not wearing a suit, it may be blamed for that.
