Crypto's intense tribalism is fueled by direct financial investment, which makes competition feel zero-sum. This is compounded by a "leper colony" mentality born from years of mainstream rejection, which created strong in-group bonds and a shared sense of struggle against outsiders.
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Persecution of successful minority groups often arises during economic hardship. The majority stops seeing the group's success as a result of skill or community focus and instead frames it as a zero-sum game where the minority is 'taking from us,' fueling resentment and justifying aggression.
When facing economic ruin, humans don't become conservative. They enter a psychological 'lost domain' where they become risk-seeking, making high-stakes gambles like meme stocks or crypto in a desperate attempt to recover their losses in one move.
Humans have a "God-shaped hole"—a fundamental need for shared values and community, historically filled by religion. As formal religion wanes, the internet facilitates the creation of new tribes. These online groups provide belonging but are often pathological and based on grievance.
The current crypto environment mirrors the lead-up to the 2008 financial crisis. 'Good money is chasing after many intrinsically weak assets,' which are then complexly leveraged and integrated into the balance sheets of systemically important institutions, creating a growing, underappreciated systemic risk.
Rapid, massive price swings in crypto are often caused by the liquidation of highly leveraged perpetual futures ("perps"). When many leveraged short positions are wiped out, it forces a cascade of buying that creates an artificial price spike, a dynamic less about market belief and more about financial mechanics.
Successful crypto projects will move beyond pure financial utility. By building in social components (community identity) and emotional components (contributing to a social good), they can build the trust and narrative strength needed to stand out in a crowded market.
The recent surge in activities like sports betting and crypto trading is not a sign of generational degeneracy but a symptom of economic pessimism. When young people feel traditional avenues for building wealth, like homeownership, are blocked, they become more risk-seeking and turn to high-variance alternatives.
U.S. military bases show disproportionately high crypto ownership, not randomly, but because of a unique culture. This is fueled by job security, boredom, and a tight-knit community where investment ideas spread through word-of-mouth, mirroring the information dynamics of a Wall Street trading floor.
With wages stagnant and traditional assets unaffordable, crypto provides an essential outlet for younger generations to stay ahead of inflation. If this 'release valve' fails, it could channel economic frustration into political extremism and social unrest.
The psychological engine of populism is the zero-sum fallacy. It frames every issue—trade deficits, immigration, university admissions—as a win-lose scenario. This narrative, where one group's success must come at another's expense, fosters the protectionist and resentful attitudes that populist leaders exploit.
