3 ways trading cryptocurrencies helped me understand politics

Investing in cryptocurrencies teaches a lot of much-needed lessons. With volatility promising massive gains but also massive corrections, you have to quickly learn how to regulate your emotions and act according to your long-term intentions rather than immediate fears. Many in the crypto community have discussed how they haven't just grown their financial wealth, but also their understanding of their own strengths and weaknesses through investing.

What I want to focus on in this article is not how involvement in crypto can improve your understanding of yourself, but how it can illuminate human psychology and social behavior on a much wider scale. What we see occurring daily in crypto markets can shed light on what we see unfolding over weeks, months, and years, in political spheres, and in the ideas that we support or denounce more generally.

I’m going to go through some of the biggest connections I see between market behavior and political or social trends.

1. There is a range of acceptable values that people will tolerate

Trading indicators such as the Bollinger bands and relative strength index suggest that although prices can fluctuate dramatically, there clearly are upper and lower bounds beyond which prices are extremely unlikely to be sustained. The images below plot the recent rise and fall of prices in Ripple and Ethereum. The blue lines that expand and contract around the candlesticks are the Bollinger bands.

You can clearly see that each time the price treads outside of the Bollinger bands – either too high or too low – it is likely that a correction will follow to bring the price to a more acceptable level.

Just as the bullish and bearish trends push for increases and decreases in prices, progressives and conservatives or reactionary political figures push for differing policies. Just as prices can typically only stay within a reasonable range based on the consensus of the market, only certain policies can be supported or even considered seriously in the marketplace of ideas.

This is described in a classic concept in political theory called the Overton Window. What Overton argued was that the public will only tolerate a certain range of ideas. In short, the viability of a policy or idea depends on whether or not it fits within a specific range: if it is too far from what people are known to accept at any given time, then it will be seen as radical or even unthinkable to the majority of the public.

We can see this range of acceptability play out in many recent discussions, such as with gender identity. Most people can accept that a transgender person should be accorded the same rights as any other human being. This is not too far from fundamental ideas of equal rights and freedoms, which should be accorded to other people regardless of sex or race. Yet, very many people do not agree that a male who has transitioned to a female has actually become a biological female.

To stretch matters even further, I do not know anyone who can get their head around the idea that someone is claiming to be ‘burstgender’ (described as: ‘a gender that comes in intense bursts of feeling and quickly fades back to the original state’) or ‘existigender’ (described as ‘a gender that only exists or feels present when thought about or when a conscious effort is made to notice it’). These are both listed as genuine gender identifications on the Gender Master List of http://genderfluidsupport.tumblr.com/gender

Interestingly, just as when prices stray too far outside the Bollinger bands and a pullback is likely, I think it can be seen that when certain ideas stretch people’s credulity too much, they tend to provoke a backlash. Many people, for example, consider political events such as Brexit or the election of Trump to be directly related to liberal media outlets extending too far beyond what the majority of people actually accept. A pullback was arguably inevitable.

2. The media plays a massive role in determining these values

Many people invest in crytocurrency are not closely watching the markets. They do not understand blockchain technology or even some of the assets they have bought.

Instead, they hear the buzz on the news – sensational stories about people making millions in Bitcoin, or that Ripple went up 30000% in a year, and they dive in. Positive media coverage of a particular asset can cause massive movements in the market.

These same investors are listening attentively when CNBC starts proclaiming the crypto apocalypse. They read misleading stories about how the founder of Bitcoin.com thinks Bitcoin is dead, yet they are not told the nuance: that the founder of Bitcoin.com is not the same as the inventor of Bitcoin, and that he has a vested interest in a rival cryptocurrency. As quickly as these investors dove into the market, they dive back out again. The sentiment among them is extremely fickle, and the information in the media they consume is far from complete, if not downright biased or untruthful.

Similarly, most people are largely uninformed about politics, and do not know or care to know the underlying principles that give a social movement its impetus. On top of this, people do not want to know more, because they typically believe they already know everything. Psychologists David Dunning and Justin Kruger, for example, have found that the people who know the least about an issue are likely to greatly overestimate their knowledge: they simply don’t know how much they don’t know (known as the Dunning-Kruger effect).

Media coverage of issues is not simply geared towards informing these individuals, but towards shaping their opinions and manipulating their behavior. Given that people do not have the time or the inclination to delve into the details of everything they see reported, public opinion can be swayed dramatically.

The recent controversy surrounding an interview with Jordan Peterson on Channel 4 is a great example such an attempt. Interviewer Cathy Newman had clearly established before the interview that she was not going to tolerate whatever Peterson had to say, and nor should her viewership. Ideas of Peterson’s that ought to be completely uncontroversial – that men would benefit from improving themselves, and that this would benefit women in a reciprocal relationship – were denounced as divisive and needlessly provocative. Past stances of Peterson, and even the words coming out of his mouth in the interview, were completely misrepresented. While much of the internet has been ablaze with critiques of Cathy, several British news outlets continue to try and spin the interview as a misogynistic attack from Peterson, and Cathy as a victim of subsequent abuse. A glance at social media suggests that a worrying number of people are buying this narrative. As a result, many worthwhile ideas, both personal and political, will be lost on them.

3. Gains are always reversible

When Bitcoin hit 20k I wanted to believe that this was just how it would be from now on. The markets were going to continue this incredible uptrend and I’d be sitting on 100k within a month.

A simple look at historical trends would suggest that this was not necessarily going to happen (not yet, at least!). In late 2013 Bitcoin first went over 1k and I imagine people felt the same then. What followed was a prolonged bear market, with prices dropping to as low as $200, and not climbing back to the same heights until as late as 2017.

The point here is that we tend to take progress for granted, and we do this in all spheres of life. Before the tragedy of 9/11, prominent political philosophers were literally proclaiming that history had come to end – so short were people’s memories for all the turbulent events of the 20th century that any major upheavals to the current social order were as good as unthinkable.

Shellshock hit the political left in 2016 when Donald Trump was elected the President of the United States, and UK politicians struggled to contain their bewilderment when 52% of the electorate voted to leave the EU.

To many on the losing side these developments were simply unthinkable. Democrats, who had struck up positions as champions of minority voters and women’s rights, believed that the ground they had gained could not be lost. It was inconceivable that a mass of American voters had not come with them for the progressive ride, and would instead vote for the physical embodiment of all the regressive elements they believed were dead and buried.
As humans, we struggle to fully comprehend that other people don’t always think the same way. We tend to forget that what we might view as progress, others might view as depravity. What we might see as increasing freedom, others might see as a flagrant breach of basic moral norms. Progress that we care about is always reversible, and must be defended not just against attack from without, but also against complacency from within.