Has the cryptocurrency bubble burst? From a certain perspective, yes it has. It burst many times, including recently when Bitcoin plunged from almost $20,000 down to under $6,000. Altcoins also had major drops in the past few weeks.
But in cryptocurrency, there are HODL (Hold On For Dear Life) speculators who defy the wildly volatile twists and turns of the cryptocurrency market. They hold on no matter what. And over time, the market cap of cryptocurrency has continued to rise.
This phenomenon leads one to wonder what truly is a bubble and how might a lasting burst of that bubble be accurately and precisely defined as such?
Perhaps the only meaningful precedent is the dotcom bubble that burst early in the year 2000. I remember it all too well. The markets were decimated. I myself liquidated my Amazon shares for very little money.
But which tech/internet businesses survived that apocalypse? Google? Amazon? Yes. Pets.com? Go.com? No, not so much.
One major difference between the current cryptocurrency market and the dotcom bubble and burst, however, is that by way of percentage of total monies invested in the equities market, only a very tiny percentage is invested in cryptocurrency. Unlike the dotcom craze, there has yet to be any significant shift of mainstream assets into the cryptocurrency space.
Why is that? Here are my observations.
It is my third observation that perhaps deserves the most attention, because the first two observations are for the most part out of the control of those deeply invested in the technology and market performance of the cryptocurrency ecosystem. The user experience barrier must be surmounted.
I realize that many coders, specifically developers in the cryptocurrency space, tend to view themselves as outliers and anarchists. But I believe that conventional market systems and solutions have much to offer as essential guidance. Why make it tough on uninitiated users to enter the cryptocurrency space? Mainstream adoption is essential for longevity. If developers are as smart as they think they are, then let them make the cryptocurrency market technologically available to everyone just as easily and conveniently as the Wall Streeters make shares of Apple available.
Will the cryptocurrency bubble burst for the vast majority of vaporware "shitcoins" now extant in the marketplace? Of course it will. Regulators are coming in and will choke off the bad actors. But perhaps the most important contribution to policing the cryptocurrency market will come from mainstream investors, including veterans of the dotcom bubble burst of 18 years ago, who will vote with their dollars. Those people do their research, and they aren't easily fooled. Mainstream adoption of cryptocurrency will act as a vetting force by which the few gems will be separated from the gravel.
Cheers!
The Great Dane
POSTSCRIPTS:
I invite questions, refutation, and support.
CAUTION/DISCLAIMER:
Please do not take any of what is written in this editorial as legal advice (or, for that matter, as advice of any kind). One should always seek advice of one's own legal counsel and/or other relevant professionals.
