Recently, while reading an article on the internet (Forbes : The fearless Girl) I noted a photo of Arturo di Modica’s statue of the Wall Street bull which can be found on Bowling Green Park, close to the Wall street stock market. It did make me stop reading to look at it for a second: just as I am sure it does in the same way, for those passers-by in New York city. One thing is certain, we are inevitably filled with a sense of awe. Such beauty, power and sheer dynamism cannot fail to draw the eye, because these emotions are highly positive. Indeed, we are magnetised by such attractive characteristics which most men and women desire to possess.
It goes without saying that you will not come across a statue of a bear in the close vicinity because its connotations, when aligned alongside Wall street, cannot be described as giving positive vibes. The terms “bull” and “bear” have been associated with the stock exchange ever since the late 19th century. While the bear is filled with pessimism, the exuberant image of the bull can only be described as being filled with energy and drive: bursting with optimism and encouraging a willingness to invest.
Where investment is concerned these highs and lows are all part of the game and inevitable as they reflect human behaviour: fear drives the stampede of the crowd. It is not surprising therefore to see these trends in the world of crypto currency: wild enthusiasm to slight unrest. Where there is money there is always fear of losing it.
Recently various ICOs have been up against a negative ripple which has caused them concern in their drive to make their projects successful. Productivist is an example of this and their response was to prolong their’s until the month of October; a highly sensible decision while facing a small fluctuation in the market.
Although the Wall Street stock market is tangible: a hive of activity, propelling investments at high velocity by enthusiastic jacketed dealers, the virtual world of investment is not. However, it inevitably echoes traditional investment patterns. After all, fear of losing or fear of losing out is always going to be a motivator wherever money making is concerned. Perhaps this is why when looking at the ICO market, it is interesting to look at the pattern the Wall street market has faced over the last 79 years.
In June this year, the Morning Star released an interesting graph on bull and bear market tendencies since 1926. The results are surprising and they clearly illustrate that our memories of darker side of Wall street are gloomier than they should be. The report demonstrates that up until today the average bull market has lasted an average 9.1 years at a time while during this same period the average bear market lasted an average of only 1.4 years at a time. The study shows brief lows with a majority lasting as little as 3–6 months at a time. The average therefore being brought up by catastrophic moments such as 1929 (2.8 years). Indeed, this is the longest period in the darker moments that Wall Street has ever seen.
Many explain such market glitches or in the case of 1929 disasters, as coming purely from lack of confidence from its many investors. However, this is clearly not the case and it is rarely a main factor. The darkest hour of Wall street in 1929 was complex and the warning bell was sounded by Roger Babson to the president as early as 1927 — well before the market’s demise. It cannot be argued otherwise: a lack of confidence was but a result. It was the overproduction of consumer goods, spurred on by easy credit, an unequal distribution of wealth across America which exposed flagrant weaknesses in the American banking system of the time which were the factors of its failure. The lack of confidence can only be argued as being the result of a dysfunctional situation.
Equating ICOs with the traditional buzz of the stock market is helpful to understand its present pattern and its future. While there will always be a flux of confidence and a wave of hesitation, as the Morningstar illustrated, those glitches will be short lived. This careful study of market patterns demonstrates that the bear market lasts usually only for a few months. Such conclusions have certainly influenced experts who quite rightly predict that the ICO market is on its way to pick up after its slight decline since the month of March.
It is certainly worth noting that poor banking control practices were central to the disarray caused in the investment world which propelled such disasters as black Monday of 1987 and the black Tuesday of 1929. This is why it is important to acknowledge that the secret to the crypto currencies and the ICOs’ longevity will be that it does not remain above scrutiny. As many wise investors will point out, while ICOs remain far from the buzz of the banking worlds, they should not be void of controls. After all, repeated debacles caused by poor controls could indeed also lead to similar discontent, mistrust and a shift in confidence. Thankfully the good news is that ICOs are ahead of their game in so much as governments are quickly realising the need to impose market regulations on the virtual world. Such measures which are being studied and gradually put in place are primarily focused on eliminating fraud in securities and ensure there are legal requirements to allow a certain amount of transparency. Although many more Libertarian leaning crypto currency users may feel that such legislation impacting the space as negative, when put alongside stock exchange disasters, it can only be seen as something positive; acting as a security against possible financial downfalls and ensuring that crypto currencies go from strength to strength.
It is indeed heartening to learn and compare the ICO alongside the stock market. Cryptocurrency is an exhilarating financial world. However, even though we are not reminded in the virtual financial world of those inevitable market fluctuations as we are when meeting Di Modica’s statue on Wall Street, the similarities with the virtual crypto market will be always there. The sheer potential of this virtual market which is filled with vitality is flagrant. It is there to carry revolutionary projects designed to change the face of how we live today meaning that investors can remain confident of its future.
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