This Is Not The Bottom
Looking For The Scapegoat
This is a story woven from myths, legends, and historical analogies, steering clear of first principles. I’ve consistently applied René Girard’s scapegoating theory to crypto in my writing, and I recommend familiarizing yourself with his mythology before diving in.
The rational investor in me argues that viewing crypto through traditional cycles is outdated as the industry matures. Yet the Girardian in me can’t escape the mythological patterns unfolding once again. When you have a hammer, everything looks like a nail.
In this short essay, I explore how crypto bull markets play out in two acts: Act 1, followed by an intermezzo of “mimetic crisis,” then Act 2, culminating in a “sacrificial crisis.”
Act 1 ignites with a price rally that unites the community in mimetic desire. The subsequent crash sparks chaotic, reciprocal violence—a figurative "all against all"—as internal conflict consumes the community.
Act 2 resolves this with renewed price surges, leading to the cycle’s end and the ultimate scapegoating. Each cycle dies from the excess of its foundational principle, and each has a scapegoat.
This reveals both a cyclical nature—this time it’s not different—and a linear progression—this time it actually is different. By the end, we’re always in a new place.
The ICO collapse left Ethereum desolate, only for DeFi summer to resurrect it. DeFi summer brought doubts on Bitcoins ability to become a financialized asset while Microstrategy and Blackrock restored it.
The 2017 bullmarket was an ICO-driven ETH frenzy. Ethereum’s world computer turned into a slot machine. As ICOs cashed out ETH, the computer crumbled onto itself, only to be resurrected in the 2020 DeFi mania, which ended with overlevered degens—Do, 3AC and SBF collapsing. The 2017 scapegoat was less individualized, nonetheless, it was real.
In 2017, Ethereum’s ICOs were both the source of prosperity and the cause of demise; in 2021, DeFi’s summer heroes followed the same arc. The best scapegoats are those who first bring wealth and celebration—like Ethereum’s ICO riches or DeFi’s unhinged lending and token printing, which minted millionaires by mere participation—only to become the reason for the fall.
Both the 2017 and 2021 bull markets unfolded in two distinct acts, separated by a striking parallel: a sharp price decline during the summers of 2017 and 2021. These intermezzos—brief but intense periods of retrenchment—interrupted the initial surges, only for the momentum to reignite with equal fervor in the second act, driven by new market leaders.
Mimetic Violence Escalation
During these intermezzos, mimetic violence turns inward as no scapegoat has yet emerged. A Girardian knows this "all against all" chaos is unsustainable; scapegoating later acts as a cleansing mechanism. But first, the violence unravels.
In 2017, the ICO boom and Bitcoin’s scaling woes triggered an early summer crash—Bitcoin fell from $2,700 to below $2,000, Ethereum from $400 to $150—igniting collective strife. The SegWit wars split Bitcoiners over block sizes, while the Bitcoin Cash (BCH) fork deepened the divide.
Ethereum’s ICO bubble soured, with users and developers blaming each other and the Foundation for congestion and scams. The Ethereum Classic (ETC) vs. ETH clash flared—ETC, touting a "pure" vision, surged tenfold from June to August—while miner-user fee disputes further fractured the community.
In 2021, a similar pattern emerged after the May crash—Bitcoin dropped from $64,000 to $30,000, Ethereum from over $4,000 to $1,700—spurred by Elon Musk’s Bitcoin critique and China’s crackdown.
Violence erupted across a more complex landscape: Ethereum’s gas fee woes fueled scaling debates between Layer 1 and Layer 2 factions; the Bitcoin Mining Council divided purists and pragmatists; DeFi’s yield farming implosion (e.g., Iron Finance) turned degens against each other; and Tether’s FUD intensified stablecoin rivalries.
The Second Act
Through a Girardian lens, these intermezzos are inflection points: Act 1’s dominant performers collapse under unsustainable excess, sparking internal violence, until Act 2 redirects desire to new assets, delaying the final scapegoating.
In 2017, Act 1 was led by Ethereum and ICOs—ETH soared from $8 to $400 by June, fueled by token sales like Bancor and Tezos—while Bitcoin played second fiddle. Post-intermezzo, Act 2 saw Bitcoin rocket to $20,000 on retail FOMO, joined by BCH (peaking at $4,000) and EOS, an "Ethereum killer."
Act 1 was ETH and ICOs; Act 2 was dominated by Bitcoin.
In 2021, Act 1 featured Bitcoin, Ethereum, and DeFi bluechips like Aave and Uniswap, maturing into “institutional-grade” assets. Post-intermezzo, Act 2 shifted to LUNA’s meteoric rise, OlympusDAO’s (3,3) staking craze, and Solana’s $260 peak, with AVAX, DOT, and memecoins (DOGE, SHIB) riding the wave.
Act 1 belonged to BTC, ETH, and DeFi stalwarts; Act 2 to LUNA, Olympus forks, SOL, and a broader altcoin rally.
The Original Sin
This cycle’s foundational principle is institutional adoption, unlike the technological innovations of ICOs (2017) and DeFi (2021). It’s a top-down shift driven by ETF and MicroStrategy (MSTR) capital. Yet all cycles share a thread of financial engineering: 2017’s global capital coordination, 2020’s onchain yield, and 2024’s institutional access.
Although the memecoin quest might sidetrack an observer, it’s merely bait (just like NFTs were a cycle ago). A cycle within a bigger cycle. But it plays a key role in revealing a rejection of grand ambition: price becomes both the means and the end, a last-ditch effort to retire bloodlines before institutions seize full control and grift becomes the domain of white collars.
Institutions are here—not just a meme from 2017’s Enterprise Ethereum Alliance but a reality in 2024 with spot Bitcoin ETFs launching on January 11. Donald Trump’s election, vowing to make America a crypto superpower, marked a leap forward. By November 2024, crypto rode a wave of enthusiasm—Wall Street was in, a strategic reserve loomed, and a stablecoin bill hinted at a new form of dollarization.
But Trump’s inauguration in January 2025 brought anxiety. Expectations of divine government intervention faltered amid trade war FUD and macro turmoil. The community realized Trump, an S-tier influencer, had “rugged” the market with his own memecoin, abruptly ending the memecoin supercycle. Act 1 closes here, with the community grasping for institutions to save them—no scapegoat in sight.
No Bottom Before The Second Act
We’re in an intermezzo now, March 2025, with Bitcoin down from its highs and the broader altcoin market absolutely decimated. The reason the intermezzo unravels is because people truly believe it is over. The violence rages with the community in disarray but the scapegoat remains unrevealed.
History whispers that Act 2 often ignites a price frenzy, redirecting desire and delaying the sacrificial crisis. Yet this isn’t a promise of price surging wildly—it’s a question of whom we’ll blame when the excess of institutional adoption finally buckles.
The scapegoat must emerge from the institutions that birthed this cycle’s promise. Will it be a vague, collective cry—“institutions killed crypto”—pointing fingers at BlackRock’s ETF empire or the faceless suits who dollarized our rebellion?
Or will it crystallize into something sharper, something personal? Could MicroStrategy implode, its $40 billion Bitcoin bet unraveling in a spectacular leveraged collapse, leaving Michael Saylor as the ultimate degen king—once hailed as a visionary, now sacrificed for our sins? Perhaps Trump, the S-tier influencer who rugged us with his memecoin hype, joins the pyre.
This isn’t the bottom—not yet. The mimetic chaos churns, and Act 2 looms. Whether it brings a frenzied rally as it was the case in the past before falling into a deeper abyss is to be seen.
One thing is certain: the scapegoat is coming, and it might wear a suit. If he does not wear a suit he could be blamed for not owning one, yet forced to show up in French riviera during high season.
Who will we burn at the stake to symbolically close another chapter?
thanks for sharing mate!
Trump the scapegoat?