Stages of Market Mania

What is mania? It is defined as a mental illness characterized by great excitement, euphoria, hallucinations and overactivity. In investing, it turns into investment decisions driven by fear and greed without balancing with analysis, cause or effect of risk and reward. Mania generally works in parallel with the product’s business development, but timing can sometimes work again.

The tech boom of the late ’90s and today’s cryptocurrency boom are two examples of how a mania works in real time. These two events will be highlighted at each stage in this article.

Thought Stage

The first stage of mania begins with a great idea. The idea is not yet known to many people, but the potential for profit is huge. This is usually translated as unlimited profit, because “there has never been such a thing before.” The Internet was one such case. People who use paper systems of the time ask, “How can the Internet replace such a familiar and entrenched system?” The spine of thought begins to build. Modems, servers, software, and websites have been used to turn this idea into something tangible. Investments in the thought phase start out unusual and are made by people who are “known”. In this case, it could be visionaries and people working on the project.

In the world of cryptocurrency, the same question is asked: how can a cryptocurrency code replace our monetary system, contract system and payment systems?


The first websites were rude, limited, slow and irritating. Doubters, as visionaries call out, “Can this really be so useful?” He looked at the words “information superhighway.” The forgotten element here is that thoughts start at the worst stage and turn into something better and better. This is sometimes due to better technology, larger scale and cheaper financing, better applications for the product in question, or greater familiarity with the product combined with great marketing. On the investment side, early apprentices come in, but there is still no euphoria and no astronomical income. In some cases, the investment has brought in a decent return, but not enough to push the masses to jump. This is similar to the slow internet connections of the 1990s, the collapse of websites, or the inaccuracy of information in search engines. In the crypto-currency world, high mining costs for coins, slow transaction times, and account hacking or theft are observed.


Word gets out that this is a hot thing on the internet and “.com”. Products and materials are made, but because of the scale involved, the cost and time spent before everyone will use them will be huge. As markets reduce a business potential by an investment price, the investment direction of the equation begins to overtake business development. Euphoria begins to materialize, but only among early adopters. This is happening with the explosion of new “altcoins” in the crypto-currency world and the large media outlets that have gained ground.


At this stage, the parabolic revenues and potential offered by the internet dominate. Not much attention is paid to the program or problems, because “the gains are huge and I do not want to miss.” The words “crazy” and “mania” are becoming more common because people buy them out of greed. Negative risks and negatives are generally not taken into account. Symptoms of mania include: any company with the name blushing, the analysis is thrown out of the window in favor of optics, investment knowledge is becoming less visible among new entrants, expectations for a 10 or 100 bagger return are common and few people know how the product actually works or knows it doesn’t work. This has had an impact on the cryptocurrency world with stellar earnings in late 2017 and a one-hundred-point increase in the use of the company’s blockchain “blockchain”. There are also “reverse purchase offers” in which the names of listed but inactive shell companies are linked to a blockchain and the shares are suddenly actively bought and sold.

Accident and Burn

The business scene for a new product is changing, but the investment scene is not changing as fast. Eventually, the way of thinking changes and a huge sales excitement begins. Variability is massive and many “weak hands” have been removed from the market. Suddenly, re-analyzes are used to justify that these companies have no value or are “overestimated.” Fear is spreading and prices are accelerating downwards. Companies that do not make a profit and survive with rumors and future prospects are blown up. Increased fraud and deception to exploit greed is exposed, leading to more fear and the sale of securities. Businesses that have money are silently investing in a new product, but unless the profit is convincing, the progress rate slows down because the new product is an “ugly word.” It starts with the folding of lending schemes using cryptocurrencies in the world of cryptocurrencies and the theft of more coins. Some marginal coins lose value due to their speculative properties.


At this stage, the investment landscape is mixed with stories of losses and bad experiences. In the meantime, a great idea comes in handy, and it’s a boom for businesses that use it. It is being applied in activities day by day. The product is starting to become standard, and visionaries are being told that the “information superhighway” is real. The average user sees an improvement in the product and begins mass acceptance. Businesses with a real profit strategy hit a blow in the crash and burn phase, but if they have the money to survive, they reach the next wave. This has not yet happened in the world of cryptocurrency. The expected survivors are those with a financial position and corporate support, but it remains to be seen which companies and coins they will be.

The Next Wave – Work Reaches Hype

At this stage, the new product is standard and the profit is obvious. The business case is now based on profit and scale rather than thought. A second wave of investment extends from these survivors to another early stage mania. The next stage was characterized by social media companies, search engines and online shopping, which are derivatives of the original product – the Internet.

The result

Manias works on a model that plays in a similar way over time. After recognizing each of the stages and thought processes, it becomes easier to understand what is happening and investment decisions become clearer.