The “sacrifice” has not yet appeared, and the bottom of the crypto market has not yet arrived?

This is a story woven from myth, legend, and historical analogy rather than from first principles. Throughout my writing, I have been applying René Girard’s scapegoat theory to the crypto space, and I recommend you familiarize yourself with his theoretical system before reading in depth.

Reason tells me that as the crypto industry matures, the traditional cyclical perspective on crypto is outdated. However, I am deeply influenced by Girard’s theory and cannot escape the mythical patterns that keep appearing. When you have a hammer in your hand, everything looks like a nail.

In this article, I will explore how the crypto bull market unfolded in two acts: the first act was backed by an episode of “copycat crisis”, followed by the second act, and finally ended with the “sacrifice crisis”.

The first act opened with a price increase that created a copycat desire throughout the community. The subsequent price crash caused chaos and conflict, which can be said to be a symbolic “everyone is in danger” situation, and the internal conflict engulfed the entire crypto community.

The second act resolved the crisis of the first act by surging prices again, thus ending the entire cycle and finding the final scapegoat. Every cycle ends with an overdevelopment of its fundamentals, and every cycle has a scapegoat.

This reveals both a cyclical nature (which is no different this time) and a linear progression (which is different this time). We are always in a new place at the end.

Ethereum was desolate after the ICO crash, and revived by the summer of decentralized finance (DeFi). The summer of DeFi raised doubts about Bitcoin’s ability to become a financialized asset, while Microstrategy and BlackRock restored confidence.

The 2017 bull run was an ICO-driven Ethereum bull run. Ethereum, the “world computer,” became a slot machine. As ICO projects cashed out the Ethereum they raised, the “computer” collapsed in on itself, only to be revived by the 2020 DeFi boom, which ended with the collapse of over-leveraged speculators like Three Arrows and SBF. The scapegoats of 2017 are less individual but real.

In 2017, Ethereum’s ICOs were both the source of the boom and the cause of the bust; in 2021, the heroes of DeFi’s summer have experienced the same journey. The best scapegoats are those who initially brought wealth and revelry, such as the wealth brought by the Ethereum ICO, or the crazy lending and token issuance of DeFi, where participants can become millionaires just by participating, but ultimately become the cause of the bust.

Bubbles are the side effects of imitation

Both the 2017 and 2021 bull markets are clearly divided into two acts, and there is a striking similarity: there were sharp price declines in the summer of 2017 and 2021. These episodes (short but intense periods of decline) interrupted the initial price momentum, which was then rekindled with the same enthusiasm in the second act, driven by new market leaders.

Escalation of copycat conflict

In these episodes, copycat conflict turned inward, as no scapegoat had yet emerged. Those familiar with Girard’s theory know that this chaotic situation of “everyone is in danger” is unsustainable; and the search for scapegoats will later serve as a cleansing mechanism. But before that, the conflict will continue to escalate.

In 2017, the ICO boom and Bitcoin’s scaling difficulties triggered a price crash in early summer: Bitcoin fell from $2,700 to below $2,000, and Ethereum fell from $400 to $150, which triggered collective conflict. The Segregated Witness (SegWit) dispute divided Bitcoin community members on the issue of block size, and the Bitcoin Cash (BCH) fork further deepened the division.

When Ethereum’s ICO bubble burst, users and developers blamed each other, and the Ethereum Foundation was also accused of being the root cause of network congestion and fraud. The conflict between Ethereum Classic (ETC) and Ethereum (ETH) broke out, with ETC touting a “pure” vision and surging 10x between June and August, while disputes over fees between miners and users further divided the community.

In 2021, a similar pattern emerged after the May price crash. Bitcoin fell from $64,000 to $30,000 and Ethereum fell from over $4,000 to $1,700, sparked by Elon Musk’s criticism of Bitcoin and a regulatory crackdown in China.

The conflict broke out in a more complex situation: Ethereum’s gas fee issues sparked a debate between L1 and L2 camps about scaling; the Bitcoin Mining Council divided purists and pragmatists; the collapse of DeFi’s liquidity mining projects (such as Iron Finance) pitted speculators against each other; and negative rumors about Tether intensified competition between stablecoins.

Act II

From Girard’s theoretical perspective, these episodes are turning points: the dominant players in Act I collapse from unsustainable excesses, triggering internal conflict until Act II redirects desires toward new assets, delaying the ultimate sacrificial crisis.

In 2017, Act I was dominated by Ethereum and ICOs. By June, Ethereum’s price had surged from $8 to $400, driven by token sales like Bancor and Tezos, while Bitcoin fared less well. In Act II, which followed the episode, Bitcoin surged to $20,000 on retail investor FOMO, joined by Bitcoin Cash (which peaked at $4,000) and EOS, known as the “Ethereum killer.”

Act I was dominated by Ethereum and ICOs; Act II was dominated by Bitcoin.

In 2021, the protagonists of the first act are Bitcoin, Ethereum, and DeFi blue-chip projects like Aave and Uniswap, which gradually develop into "institutional-grade" assets. In the second act after the interlude, the market's attention turns to the rapid rise of LUNA, the (3,3) staking boom of OlympusDAO, and Solana's peak of $260, and Avalanche Protocol (AVAX), Polkadot (DOT), and Meme tokens (DOGE, SHIB) also follow suit.

The first act belongs to Bitcoin, Ethereum, and DeFi blue-chip projects; the second act belongs to LUNA, OlympusDAO fork projects, Solana, and the broader altcoin rally.

Original Sin

Unlike the technological innovation represented by ICOs in 2017 and DeFi in 2021, the fundamental driving force of this cycle is institutional adoption. This is a top-down shift driven by Bitcoin spot ETFs and MicroStrategy’s money. Yet all cycles share a common thread of financial engineering: global capital coordination in 2017, on-chain returns in 2020, and institutional access in 2024.

While the chase for meme tokens may distract observers, it is merely a decoy, just like non-fungible tokens (NFTs) in the previous cycle. This is a small cycle within a large one. But it plays a key role in revealing the rejection of grand aspirations: price becomes both a means and an end, a last-ditch attempt to get out of the way before institutions take full control and fraud becomes the exclusive domain of white-collar workers.

Institutions are in. This is no longer a 2017 Enterprise Ethereum Alliance talk, but a 2024 reality, with the launch of the Bitcoin spot ETF on January 11. The election of Donald Trump, who promised to make the United States a crypto superpower, marked a major step forward for cryptocurrencies. By November 2024, crypto markets are in a frenzy, Wall Street is in the game, strategic reserves seem to be on the horizon, and a stablecoin bill hints at a new form of dollarization.

But Trump’s inauguration in January 2025 brings anxiety. Amid negative rumors of trade wars and macroeconomic turmoil, expectations of government intervention in the market have been dashed. The crypto community realizes that Trump, as a top influencer, has destroyed the market with his own Meme token, abruptly ending the Meme token supercycle. The first act ends here, and the community looks to institutions to save them, but there is no scapegoat in sight.

The bottom has not yet arrived before the second act

It is now March 2025, and we are in the interlude of the first act, with Bitcoin prices falling from their highs and the entire altcoin market taking a serious hit. The reason this interlude gets out of control is that people really think it’s over. The conflict escalates, the community is in chaos, but the scapegoat has not yet appeared.

History suggests that the second act often triggers a wild run-up in prices, redirecting desire and delaying the onset of the sacrificial crisis. However, this does not mean that prices will necessarily soar wildly. The question is who we will blame when the overdevelopment of institutional adoption finally becomes unsustainable.

The scapegoats will inevitably come from the institutions that brought hope to this cycle. Will it be a vague, collective cry — “Institutions killed the crypto market” — pointing the finger at BlackRock’s ETF empire or the anonymous suits who dollarize our rebellion?

Or will it crystallize into something more specific and personal? Will MicroStrategy collapse, its $40 billion Bitcoin bet going up in a spectacular leveraged collapse, leaving Michael Saylor as the ultimate speculative king — once hailed as a visionary, now a victim of our own faults? Perhaps Trump, the top influencer who abandoned us with meme token hype, will also become a target.

This is not the bottom, at least not yet. The copycat chaos continues, and the second act is coming. Whether it will lead to a wild rally before a deeper descent, as it did in the past, remains to be seen.

One thing is certain: a scapegoat is coming, and it may be in a suit. If it isn’t, it may be blamed for it.