Crypto
Why in the crypto market, stories determine the price, not numbers
In the universe of Bitcoin, Ethereum & Co, their own rules apply. While traditional investors focus on metrics, profits, or cash flows with stocks, cryptocurrencies operate on completely different mechanisms. Prices here are driven less by fundamental data and more by sentiments, narratives, and relative comparisons. Those who ignore this dynamic risk missing trends or making wrong decisions.
The price writes the story – not the other way around
A look at Ethereum shows how quickly perceptions in the crypto market shift. In the spring, the platform seemed to be under pressure – technical challenges, doubts about growth, stagnating developer activity. But with the price increase, the narrative changed abruptly: Suddenly, Ethereum was considered the backbone of the stablecoin infrastructure and a gateway for institutional investors. The example shows: In the world of cryptocurrencies, the price dictates the story, not the other way around.
While in traditional markets the value determines the price, in the crypto sector it is often the other way around. The lack of objective valuation standards creates a vacuum that is filled by comparisons and emotional narratives. Those hoping for a "fair valuation" are usually searching in vain.
A Game of Relations
Instead of hard data, many investors orient themselves by relative sizes. Bitcoin is worth two trillion dollars—so, according to simple logic, Ethereum with its greater functionality must be worth at least half. And if Ethereum is worth 500 billion dollars, why shouldn't Solana, which is faster and cheaper, catch up soon?
This mindset may seem irrational, yet it shapes the behavior of many market participants. Crypto investors think in narratives, not in balance sheets. As soon as a project tells a compelling story – such as about technological superiority, decentralization, or institutional acceptance – its value can virtually explode.
Psychology Trumps Fundamentals
For investors, this means: It's not enough to understand the code or the whitepaper. What matters is understanding the story the market currently wants to tell. Whether Bitcoin is seen as "digital gold" or as "inflation protection" influences demand more than any on-chain metric.
At the same time, the crypto market is highly reflexive – price gains attract media attention, which in turn attracts new investors, which further drives prices. The result is a self-reinforcing spiral of greed, hope, and fear.
What investors should really pay attention to
Despite all psychology, one thing remains important: Quality. Projects with clear benefits, stable community, and transparent governance withstand hypes better. Those who adhere to fundamental innovative strength instead of short-term euphoria have a long-term advantage.
The key is the change of perspective: Instead of searching for a theoretically "correct price," investors should identify those crypto projects that have the potential to shape a lasting narrative. In this industry, it's not the best technologies that win, but the best stories that succeed in convincing millions of people.
The crypto market is thus less a discipline of balance sheets than a collective psychology experiment. Those who understand it can profit from it – everyone else will continue to puzzle over why Bitcoin and others keep breaking rules that simply never existed there.
