As per Bank of America, the plunge in speculative tech stocks and crypto since the beginning of the year now matches previous market crashes like the dot-com crash and the financial collapse.
Companies and stock prices bolstered by a decade of cheap money and boosted by government stimulus have swiftly unraveled when interest rates increase, revealing initiatives based on little more than bluster and exaggeration.
The most major losses have been in cryptocurrency, where several currencies have completely collapsed. For years, authorities and financial gurus have warned that this may happen.
It’s tempting to dismiss the industry, but you shouldn’t. Crypto was founded during the financial crisis and has seen several collapses. Yet, it has roared back every time.
Yes, there was a lot of garbage in the industry – frauds, wild parties, get-rich-quick schemes – but the fundamental technology is still fascinating. Crypto has more in common with the dot-com bubble than with the financial crisis of 2008.
Developers working on blockchain and crypto technologies will undoubtedly keep pressing ahead, just as 2000 swept away many low-quality initiatives and prepared the way for Amazon, Google, and others. Many committed developers welcome the correction since it eliminates the rogues who tarnished their work.
Crypto will flourish when it becomes invisible, underlying, and enabling technology that we use every day, just as the internet has become part of our daily lives.
It may take another decade, or perhaps longer. It may never happen. However, the current collapse will not stop those striving to make it a reality.