In this article I will talk about hype, trends, FOMO and events. Yes, you got it right, about everything that leads you to mistakes when trading or speculative investments. You may not know it but it's the "narratives" and "catalysts" that drive where cryptocurrency money flows. The catalysts are events that drive the hype and FOMO. Narratives are the things people believe in because of the catalyst.

NARRATIVES
An illuminating example driving the price fluctuation was explained by John Maynard Keynes' 1936 "Keynesian beauty contest". Participants were shown photos of 100 women and asked to select the six women they thought were most attractive . "If you pick a few of the winners correctly, you'll be rewarded." One strategy for a participant would be to choose the six faces he considers most beautiful. But a more astute participant, who wants to maximize the chances of winning a prize, should think about what the majority of the population's idea of beauty is and choose based on the common perception. This reasoning can be taken one step further, in order to take into consideration the fact that the other participants will also make their own choices not based on their own tastes but taking into account the collective perception of beauty and so on ad infinitum.

There are therefore 3 types of thinkers:
-𝖡𝖺𝗌𝗂𝖼 𝗍𝗁𝗂𝗇𝗄𝖾𝗋𝗌 (base thinkers choose faces based on beauty)
-𝖬𝗂𝖽𝖽𝗅𝖾 𝗍𝗁𝗂𝗇𝗄𝖾𝗋𝗌 (average thinkers pick faces that "think" will pick base thinkers)
-𝖠𝖽𝗏𝖺𝗇𝖼𝖾𝖽 𝗍𝗁𝗂𝗇𝗄𝖾𝗋𝗌 (advanced thinkers are in god mode. They pick faces they think will pick both basic and average thinkers before they pick)

You can replace this example by this equality:
-miss faces=cryptocurrencies
-people who choose = investors

Base thinkers buy because they like the project and the team.
However, tokens only pump when people buy, not because it's a good project. It is a naive strategy for trading. In the short term concepts such as project, supply, burn, utility of a token (what we call "tokenomics") make no sense because the pump/dump movements are too fast.
However most people are not basic thinkers but middle thinkers: they buy projects they think others will buy. They think they are intelligent but they are not. They're just following the crowd. They can make money if they take profit, but the herd leaders will always get a bigger purse.

For example, average thinkers buy Pepe token after it has been listed on Binance because they believe that others will do the same (it is known that the price of a token pumps when listed). In most cases, the middle thinkers lose money and never win because after the pump, it's the descent. They will sell at a loss. Finally advanced thinkers try to predict what basic and average thinkers (like me) will do. They do it before the other two:

"They buy before we decide to buy and they sell before we decide to sell. They know how to outperform the market"

WHAT IS THE SECRET OF ADVANCED THINKERS?
Their fortunes depend on knowledge of the event, not on the event itself.
Events can be:
·Cryptographic/non-cryptographic
·Predictable / unpredictable

What does this mean? Even if a project has good utilities it doesn't mean it's the right one to invest in. Fundamental analysis helps you know if a project can do well but narratives and catalysts tell you 𝘄𝗵𝗲𝗻 it will.
For example, a non-cryptocurrency-related and unpredictable event is the release of ChatGPT (catalyst). People believe that AI is the future, so it sparked the price hike for AI token (narrative).
The narrative formed after the event as it was not anticipated by most people.
Another example was the soccer world cup (catalyst) and the World Cup Inu token that made crazy increases due to possible partnerships with players (narrative). However $WCI started going down as soon as the world cup started because FIFA announced Algorand as their official partner so people moved there.

SHORT AND LONG TERM NARRATIVE
Narratives can be short-term but also last a long time becoming trends.

For example:
-Metaverses
-Memecoins
-NFT
-AI
-ZK-rollup
-Omnichain
-Layer2

The nature of the catalyst determines how long the narrative will last. How do I find narratives? You need to consider important news and events and ask yourself how this might impact cryptocurrencies. The AI trend was external to cryptocurrencies, however we have seen upside for these tokens as well.
You also need to know when to tell because most narratives are short-lived. When you start talking about that trend on Youtube, on social network, on blog, on Telegram, it is most likely too late. You could become a bagholder.

"When retailers start taking advantage of the trend, know it's time to take profit"

Remember the first rule of the crypto world: money is neither created nor destroyed, but transferred from the masses to advanced thinkers.

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