This post is authored by a traditional fund manager who's been through the dot.com bubble and draws lots of parallels between crypto now and dot.com back then.
The things he highlights as bubblicious are already under everyone's eyes and we have often covered them. What's worth mentioning is his prediction of how the carnage will unfold:
- EU/US to issue a regulatory framework for ICOs
- massive delisting of security tokens from exchanges
- tokens to lose +90% of their value, regardless of quality (example of Amazon in the equity world that dropped to $5 per share, now at $1,000+)
- real utility tokens to crash in tandem, but to recover quickly
- in the aftermath, quality projects will comply with securities law, granting equity-like rights to holders
- new ICOs will be of established projects with products and live use cases.
One thing he fails to mention is the scale of crypto now vs tech in the dot.com days. We are still one order of magnitude away from the values reached back in 2000-2001, and we know that masses of institutional capital are just about to get into the market. Things may get way more irrational before they get more rational.
Regardless of when the bubble will burst, it's always worth keeping this Fred Wilson line in mind: 'Nothing important has ever been built without irrational exuberance'. The only way to navigate this space for us is to keep a long term focus on the foundational technologies that can survive any bubble pop.
Bonus 1: The Economist talks
about the Bitcoin bubble as the definition of the greater fool theory.
Bonus 2: if you believe in technical analysis, someone showed how the Bitcoin bubble already popped
and we are still in a strong upward leg.
No one has a clue...