Some Believe Cryptocurrency Crash Mirrors Dot Com Bubble Trouble
If you watched the Super Bowl this year, you might recall the most successful and most talked about commercial was of Larry David giving a pitch for a cryptocurrency. Even NBA star Steph Curry and director Spike Lee were all in on the crypto trend, making more ads for it. It all sounds very exciting and a lot of money has been manifested from the digital universe populated with thousands of types. About 850,000 such cryptocurrencies at last count.
After looking into a great deal of information about cryptocurrencies, it appears boils down to the simple advice our elders used to give us: “If it seems too good to be true, then it probably is.”
Benjamin Pimentel has a long detailed piece about cryptocurrencies and their amazing ups and downs. In particular, how the year 2022 has been rough on investors. And a lot of people compare the recent trends to the dot-com bust in the early 2,000s.
The dot-com crash saw the collapse of high-flying startups that first commercialized the web. It also set the stage for Jesse Powell’s debut as a tech entrepreneur.
“All the companies that blew up were liquidating their laptops and office equipment,” the Kraken co-founder told Protocol, recalling how he built a business by going to startup bankruptcy sales during the crash. “I was buying stuff and selling it on eBay.”
Remember those days? Now fast forward two decades and hear what Pimental found. Instead of bankruptcy fire sales, Powell now runs a tech powerhouse of his own, one of the world’s largest crypto exchanges estimated to be worth $11 billion that has raised more than $125 million in funding. But the comparison is fair.
Layoffs, bankruptcies, and the rapid evaporation of wealth — the parallels are everywhere. The dot-com crash wiped out about $5 trillion in investments, far more than the $2 trillion lost in the total market value of cryptocurrencies over the past seven months.
They both were huge swings in the value of individual investors’ portfolios.
The crypto crash is a less isolated phenomenon: It coincides with a global economic slowdown triggered by inflation, rising interest rates, the lingering COVID-19 pandemic, supply chain chaos, and the war in Ukraine.
But it’s also in some ways more isolated, with far fewer households holding crypto now than had tech stocks in their portfolios during the dot-com boom. Despite recent warnings about crypto’s potential to create international “financial stability risks,” it’s expected to have a limited impact on the global monetary system.
That’s what makes the crypto crash different from the dot-com crash, said Silicon Valley forecaster Paul Saffo. “The dot-com bubble had one big crash and then recovered,” he told Protocol. “I think what we’re going to see is a succession of bubbles and we’re going to crash our way multiple times in the process of trying to figure out where crypto fits into our lives.”
The article shares big money numbers and information on the people in control of these incredible amounts of digital dollars. dollars.
And for everyone who is shouting a warning about crypto, there are equal numbers of people who are still gung-ho and remain big believers in the digital currency world of cryptocurrencies.
read more at protocol.com
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