Original author: Matti
Original translation: Luffy, Foresight News
This is a story woven from myths, legends, and historical analogies rather than first principles. Throughout my writing, I have been applying René Girard’s scapegoat theory to the cryptocurrency space, and I recommend you familiarize yourself with his theory before reading further.
Reason tells me that as the crypto industry matures, the traditional cyclical perspective on crypto is outdated. However, I am deeply influenced by Girards 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 post, I will explore how the crypto bull run unfolded in two acts: the first act was preceded by an interlude of a “copycat crisis,” followed by a second act that culminated in a “sacrifice crisis.”
The first act opened with a price surge that created a desire for imitation across the community. The subsequent price crash triggered chaos and conflict, a symbolic “everyone is at risk” situation, and internal conflict engulfed the entire crypto community.
The second act resolves the crisis of the first act by another surge in prices, thus ending the cycle and finding the final scapegoat. Every cycle ends in the excess of its underlying principles, 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). In the end, we always end up in a new place.
Ethereum was desolate after the initial coin offering (ICO) debacle, only to be reborn during the summer of decentralized finance (DeFi), which 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 on itself until the DeFi craze of 2020, which ultimately ended with the collapse of over-leveraged speculators like Three Arrows Capital and SBF. The scapegoats of 2017 were less individualized, but they were real.
In 2017, Ethereum’s ICO project was both the source of prosperity and the cause of decline; in 2021, the heroes of DeFi Summer have experienced the same journey. The best scapegoats are those who initially brought wealth and revelry, such as the wealth brought by Ethereum ICO, or the crazy lending and token issuance of DeFi, where participants can become millionaires just by participating, but eventually become the cause of decline.
Bubbles are a side effect of imitation
Both the 2017 and 2021 bull runs were clearly divided into two acts, with one striking similarity: sharp price declines occurred in the summer of both 2017 and 2021. These interludes (short but intense periods of decline) interrupted the initial upward price momentum, which was then rekindled with the same enthusiasm in the second act, driven by new market leaders.
Escalation of imitative conflict
In these episodes, since no scapegoat has yet emerged, the mimetic conflict turns inward. Those familiar with Girard’s theory know that this chaotic situation of “everyone is at risk” is unsustainable; and the search for scapegoats will later serve as a cleansing mechanism. But before that, the conflict will continue to intensify.
In 2017, the ICO boom and Bitcoin’s scaling woes triggered a price crash in early summer: Bitcoin fell from $2,700 to below $2,000, and Ethereum fell from $400 to $150, sparking collective conflict. The Segregated Witness (SegWit) dispute divided Bitcoin community members over the block size, and the Bitcoin Cash (BCH) fork further deepened the split.
As Ethereum’s ICO bubble burst, users and developers blamed each other, with the Ethereum Foundation also accused of being behind network congestion and fraud. A conflict broke out between Ethereum Classic (ETC) and Ethereum (ETH), with ETC promoting a “pure” vision and surging 10 times in price between June and August, while a dispute over fees between miners and users further divided the community.
In 2021, a similar pattern emerged following the May price crash, which saw Bitcoin fall from $64,000 to $30,000 and Ethereum fall from over $4,000 to $1,700, sparked by Elon Musk’s criticism of Bitcoin and a regulatory crackdown in China.
Conflicts erupt in a more complex landscape: Ethereum’s gas fee issue sparked a scaling debate between the L1 and L2 camps; the Bitcoin Mining Council divided purists and pragmatists; the collapse of DeFi liquidity mining projects such as Iron Finance pitted speculators against each other; and negative rumors about Tether intensified competition among stablecoins.
Act II
From Girard’s theoretical perspective, these episodes are turning points: the dominant players in the first act collapse from unsustainable overprosperity, triggering internal conflict until the second act redirects people’s desires toward new assets, thus postponing the final sacrificial crisis.
In 2017, the first act was dominated by Ethereum and ICO projects. By June, Ethereums price soared from $8 to $400, driven by token sales projects like Bancor and Tezos, while Bitcoin performed slightly less well. In the second act after the interlude, due to the FOMO sentiment of retail investors, the price of Bitcoin soared to $20,000, and Bitcoin Cash (peaked at $4,000) and EOS, known as the Ethereum killer, also joined the rise.
The first act was dominated by Ethereum and ICOs; the second act 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 markets attention turned to the rapid rise of LUNA, OlympusDAOs (3, 3) staking boom, and Solana reaching a peak of $260. Avalanche Protocol (AVAX), Polkadot (DOT), and Meme tokens (DOGE, SHIB) also followed suit.
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 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 exchange-traded funds (ETFs) and MicroStrategys funding. However, all cycles have a common financial engineering thread: global capital collaboration 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, 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 trouble 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 a Bitcoin spot ETF on January 11th. The election of Donald Trump as president, who promised to make the United States a crypto superpower, marks 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 verge of becoming a reality, and a stablecoin bill hints at a new form of dollarization.
But Trump’s inauguration in January 2025 brought anxiety. Amid negative rumors of trade wars and macroeconomic turmoil, people’s expectations of government intervention in the market like a god were dashed. The crypto community realized that Trump, as a top influencer, destroyed the market with his own Meme token, abruptly ending the Meme token supercycle. The first act ended here, and the community looked to institutions to save them, but there was no scapegoat in sight.
The bottom has not yet come before the second act
It is now March 2025 and we are in the first episode of the interlude, where the price of Bitcoin has fallen from its highs and the entire altcoin market has been hit hard. The reason why this interlude is out of control is that people really think that everything is over. The conflict is intensifying, the community is in chaos, but the scapegoat has not yet appeared.
History suggests that the second act often triggers a wild price surge, redirects desires, and postpones the arrival of the sacrifice crisis. However, this does not mean that prices will necessarily soar wildly. The question is who we will blame when the excessive development of institutional adoption is finally unsustainable.
The scapegoats will inevitably come from the institutions that brought hope to this cycle. Will it be a vague, collective cry of “institutions killed crypto” — pointing the finger at BlackRock’s ETF empire, or the faceless men in suits who dollarized our rebellion?
Or will it crystallize into something more specific and personal? Will MicroStrategy collapse, its $40 billion Bitcoin bet wiped out 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 of public criticism.
This is not the bottom, at least not yet. The copycat chaos continues, and the second act is coming. Whether it will bring a wild rally followed by a deeper plunge into the abyss, as it has in the past, remains to be seen.
One thing is certain: a scapegoat is going to appear, and it will probably be in a suit. If it isn’t, it will probably be blamed for it.
