Even with so many positive developments happening in the cryptocurrency space lately, the market condition is still very much in survival mode. The total crypto market cap sits at just over $200 billion – down more than 75 percent from its ATH of $835.6 billion in early January of this year. In February, the market had its feet knocked out from under it and has been trying hard to get back into the game ever since.
Crypto Markets Down 80%
Amid Wednesday’s crypto market nosedive to $186.2 billion – a low not seen since November 2017 – Bloomberg reported that the MVIS CryptoCompare Digital Assets 10 Index has fallen to a new low, extending its collapse to a loss of 80 percent since its January high. Call it a bust, a crash, or whatever, but this means that the decline of the cryptocurrency market has officially surpassed that of the dot-com crash.
That’s right. The “peak-to-trough” decline of the tech markets after the dot-com bubble burst reached a low of “only” 78 percent, meaning that the crypto market has officially crashed harder than the dot-com market.
Recapping the Dot-Com Bubble and Bust
For those who may not remember – or who might not have even been born yet – the dot-com bubble was a “historic economic bubble” and period of excessive speculation within the tech markets that lasted from 1995 to 2000, approximately. It was born out of the extreme growth in the use – and use cases – of the Internet, which was being touted as bleeding edge technology that was going to disrupt everything and change the world (sound familiar?).
At the peak of the dot-com bubble, the Nasdaq Composite Index – which included many tech and internet-based companies – had a market cap of roughly $9.6 trillion. The bursting of the bubble lasted from March 11, 2000, through October 9, 2002, during which time the index fell 78 percent.
In the aftermath, many online retailers faltered and ultimately went out of business. One of the most notable of these is Pets.com, who, even with the backing of Amazon.com, couldn’t weather the storm and ended up going out of business just nine months after its IPO. Cisco’s stock fell by 86 percent, while most internet stocks had lost nearly 75 percent of their value.
So Where’s the Upside?
Looking at the events of the dot-com bubble and the burst of the same, it’s hard not to draw comparisons. Like the Internet, cryptocurrencies and blockchain have been hailed as world-changing, bleeding edge technologies. Just like everybody and their grandmother was putting up a website (whether they needed to or not), companies or jumping on the blockchain bandwagon – in many cases with little to no understanding of what blockchain is or whether it is even really needed. Some companies are simply slapping ‘blockchain’ onto their name in the hope of capitalizing on the hype.
And of course, just like during the dot-com bubble, investors were throwing money at ICOs and investing in Bitcoin and other cryptocurrencies, angling for the next 1000x payout. Many of them got in too late and lost significant percentages of their investments.
Neil Wilson, Chief Market Analyst of Markets.com said:
It just shows what a massive, speculative bubble the whole crypto thing was — as many of us at the time warned. It’s a very likely a winner takes all market — Bitcoin currently most likely.
So where is the upside?
If you’re reading this, you’re ON the upside. Think about it. Yes, the dot-com bubble burst, but it came roaring back, and now the Internet is an integral part of our daily lives. There are currently more than 4 billion people with Internet access and, collectively, they spend more than $1 billion per day online.
The cryptocurrency market – and blockchain industry – will make the same kind of recovery. The signs are all there. Businesses and governments alike are starting to adopt blockchain technology for reasons that actually make sense and countries are beginning to implement clear and reasonable regulations with regards to cryptocurrency and ICOs. And we’ve already seen the difference that Bitcoin and other cryptocurrencies are making in countries like Venezuela and Turkey, where hyperinflation have rendered the local fiat currency practically worthless.
So be patient and don’t panic – because while crypto may be down, it most certainly is not out.
What do you think about the crypto market decline surpassing that of the dot-com bust? Do you think it can rebound? What will it take? Let us know in the comments below.
Images courtesy of Bloomberg, Shutterstock