He returned from the U.S. in early 2007 and began working on a new experimental musical project. Bălan performed the songs, which were a deviation from his prior material, in a falsetto voice. These shifts led him to decide to release the music under the stage name Crazy Loop, an alter ego that contrasted with his real personality. The musician described Crazy Loop as "funnier, crazier and more ironic" than himself and said, "I'm not like that really but part of Crazy Loop lives inside me." Bălan officially launched Crazy Loop in October 2007 with new single "Crazy Loop (Mm Ma Ma)", which landed on the charts in Germany, Austria, Poland and Romania, as well as on European chart Euro Hot 200.
Crazy Loop's debut album, The Power of Shower, was released in December, and included some of the songs Bălan had created for his unreleased album in Los Angeles, the previous year. The album's second single, "Johanna, Shut Up!" was released in the summer of 2008 along with a music video directed and shot in Los Angeles by Marc Klasfeld. The single was the final official track released under the name Crazy Loop. The artist released a third single from The Power of Shower in October 2008 under his own name, Dan Bălan. The track, a rock ballad called "Despre Tine Cant (Part 2)," dropped in Romania and Moldova and was accompanied by a music video directed by Greg Olive. Crazy Loop was nominated for Best Romanian Act at the 2008 MTV Europe Music Awards but lost to Morandi.
Later in 2009, the singer re-released The Power of the Shower album as Crazy Loop Mix, an exclusive release with four new tracks, which included "Friday Night", "My Best Summer", "Judy's Love Line" and new single "Chica Bomb". This release marked the beginning of a new phase in his solo career. In November 2009 acting President of Moldova Mihai Ghimpu, awarded him the honorary title of Master in Art for successes in creative activity, contributions to propagation of musical art and high performing artistry.