the actual rise of the bubble happens in a markedly opposite manner: quick and violent.
What's the reasoning behind this? Other than it's the history of bubbles. Why does it explode as opposed to steady increase? All of a sudden demand increases 1000x and everyone buys at the same time, seems kind of remote? Is it just crazed excitement?
A few reasons.
The history of bubbles is certainly one worth considering, and not to be discounted: lots of us
first noticed BTC because of a bubble - it popped up in news, we read about it, either bought in then (high) or waited and watched, bought some on the way down, thinking that it could do it again. Even though it's quite common (and true) to hear or say "past performance doesn't guarantee future performance," there is a definite psychological effect that says "well shit, BTC's spiked multiple times before, and it's going up again - I should put a little/jump in this time"
Another reason is what I mentioned in the post above. The price has been depressed quite a bit over the last few months, as people that had held BTC were gradually selling it off to either cut their losses or take some kind of a profit. I would venture a guess, though, that quite a few people made some hefty gains on the way up and the way down, and are now sitting largely on the sidelines while we are testing the lows, and have possibly gotten to the bottom. If this isn't the bottom, then the market will keep trying to find it. Once we do, however, these same people that have been sitting and waiting are also the same folks that were waiting for their buy-in point. If a large amount of that same money comes
back into BTC, there's only one direction it can go - and it will get there quickly because it's already been there before. So the incremental jumps from 400-500, 500-600, 600-700 could very well be something that you can sit and watch in the course of a few hours or day on Bitcoin tickers.
It's definitely not so much of a case of demand increasing dramatically as it is a case of investors saying: "I have a chance of increasing my investment by hundreds or thousands of percents in a few days or weeks. I want to invest/re-invest and don't want to get left behind"
Read madness and the delusion of crowds. You are right.
There's a ton of herd mentality in it as well, but that should be obvious. To call buying at the beginning of Bitcoin's bubbles madness though, seems like shortsighted marginalization - there are some of us on this board who have made tremendous gains by paying attention to them and riding that geyser upwards.
Keep in mind, I'm not saying we are at the bottom now, or were, and are currently in the precursor phase of that event. I'm only describing two major factors that I think have contributed to prior bubbles, and will contribute to the next one.
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