CRYPTOCURRENCY BUBBLE BURST
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.
- FUD > FOMO. "Fear, uncertainty, and doubt" is still greater than "fear of missing out". FAKE CRYPTOCURRENCY NEWS further skews this equation against mainstream adoption.
- Mainstream investors in the common shares of conventional companies are still riding high on the Dow Jones Industrial Average having risen to over 25,000, the result of a continuous bull market stretching back several years.
- The UX/UI user experience in cryptocurrency is not yet nearly as seamless or effortless as in conventional equities investing.
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
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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.
Amazing article, these observations are spot on and will no doubt be obvious to everyone following the tech coming out of the market, and the crackdowns that are happening against those who don't show any signs of technological capability, and only contributed to the FUD factor with their shady icos. very enjoyable read, thank you
@thegreatdane
This is intellectually efficient and filled with a wonderful line of thought. Your observations are spot on. Anybody with a good sense will know all these, or at least agree with this. This is a blow to the FUD factor
How gracious of you to describe my article as intellectually efficient! What a superb compliment! Many thanks. Yes, I believe the FUD factor will decrease as a function of increasing user comfort with the technology of access.
I am looking forward to see what Dane puts out next, all top level amazing articles so far!
Thank you for reading my posts so far. I greatly appreciate your support.
Thank you for your kind words about my article. Your substantive remarks are excellent. There is a lot of hype in the cryptocurrency space; no wonder regulators are scrutinizing it. I hope some significant portion of the money raised in ICOs is dedicated to developing technology to bridge the user experience gap. Time will tell.
Looking forward to your next article @TheGreatDane
The greatest hurdle is the user interface as you said. It is simply too complicated and obscure for random people to find their way into this space. You basically need someone to hold your hand throughout the entire learning process and the complexity is entirely too much for most people I have found.
Yes, that is exactly my point. Thank you for stating it so practically. I believe many potential users are effectively turned away from the cryptocurrency markets due to the disease of poor interface experience.
Bitcoin increased significantly from February of this year to the point that I would NEVER discount any cryptocurrency having the potential to soar (or plummet, for that matter). I totally agree with you that crypto should be readily available to the mainstream adoption of all people and it should be as readily and easily accessible as a Wall Street stock. Options for the middle man (and woman) would be great! :-)
Shannon, thank you for taking the time to read my post. I see you joined Steemit only just last month. I am flabbergasted by your phenomenal productivity. 189 posts and 1142 followers. Extraordinary! Brava!
Thank you! I have been working hard to keep up the pace here and I have to say I am getting addicted to this place! :-)
be creative, be adaptable..... excellent post !! Congratulations
Mainstream adoption will only happen when investors no longer have to jump through a series of increasingly challenging hoops before they can actually invest in anything. You need to exchange your fiat for one of the big coins, then move that crypto over to an exchange or buy coins from another source, and then store them in a wallet before reversing the whole process if you ever want to withdraw. The company that comes along and combines all of this, and gets the public to get involved by buying into their platform, will transform everything. I saw an article earlier that said 8% of Americans have invested in crypto so there is still huge scope for greater investment and I don't think we're close to anything bursting just yet.
Thanks for your valuable insights. Your observation that user experience hurdles are getting worse not better is of particular note and concern. Reading your comment about increasingly challenging user experience reminds me of the ever more difficult puzzles Bitcoin miners must solve in order to earn Bitcoin. I must say it all seems like a terrible waste of energy. May I ask which article you read that claimed 8% of Americans have invested in cryptocurrency? That would be more than 26,000,000 Americans, and I cannot persuade myself to believe that statistic to be even remotely accurate.
No worries. The link is here; it's only a sample set of 2001 adults -- http://coinsocial.io/2018/03/20/8-americans-cryptocurrencies/
Having gotten into crypto last December and sitting on huge losses (even after trying to average down), I don't have much hope. Call it FUD or whatever, but this crash has lasted for months now, which is a long time in the crypto space esp. given that it's a 24/7 market. If the All Time Highs are not broken soon then crypto will lose all attraction to investors, especially since most got burned. I may hold for a couple more months but that's it...at some point it's just dead money at best and the chances of going to zero increase every day. Crypto is not new but now that it's a bear market everyone is talking about the long term and "years"..nobody spoke that way before...I find that the cryptosphere just changes it's story every day. Everyone said things would get back in gear right after Chinese New Year, that didn't happen and in fact most coins crashed much further. Too much Kool Aid everywhere, without any critique.
It is very good of you to share your sobering personal experience in buying cryptocurrency. On reflection, I imagine anyone first jumping into the crypto markets in December 2017 is likely to be underwater right now. I agree wholeheartedly that stories published about cryptocurrency are often imprecise and inaccurate. I address that theme in my previous post "FAKE CRYPTOCURRENCY NEWS". Best of luck.
I am not an expert and i am still in infant stage in Cryptocurrency world but i am learning everyday but i know one thing that bubble situations in an market is not good because bubble word creates the initial step of speculations and that's not good for market because speculations can prove decision changer for some people. Thanks for sharing and wishing you an great day. Stay blessed. 🙂
Your humility is admirable yet possibly overstated. How would you define an "expert" in an area as nascent as cryptocurrency? There are individuals who are knowledgeable, to be sure, but I imagine there are major disruptions looming on the horizon.
Agreed with your words.
Dane, you are correct that the bubble has burst. The $20,000 to current $8,000 on BTC is a great example. If anything like that had happened to the stock market, people would be leaping out of windows.
But in crypto people are still drunk on the profits that have early investors have reaped on the way to $20K and even at the $8K level. And those who did not make "drunk money" are star struck by the stories of those who did. They are jumping in and waiting for the party to get crazy again.
Except that this is going to be a very different kind of party. Crypto and BTC have accomplished their first goal in showing that digital currency can exist, attract buyers, and build a global infrastructure. No one doubts that now. So there will not be another inflating bubble until crypto shows what it can be used for.
Once there is a good solid daily use outside of trading and holding, then a few coins will go nuts and thousands of coins will disappear. How do you know which ones? Most of us will not know until the smoke clears and it is too late to get on the right train. But almost certainly two of them will be BTC and ETH. So you might get on those trains now and just wait for it. But it is not going to happen anytime soon.
Roger, what an exceptional comment. Your insightful sentiments are in fact a post in and of itself. And I am all the more honored inasmuch as your profile reveals that your comment on my post is the very first comment you have made on Steemit. Effectively, your excellent comment is also your first post. Bravo. To the substance of your remarks, I must say they seem to me to be level-headed and exactly right, if predictions we are to make. My opinion is identical: the next step in the acceptance of cryptocurrency as a mean of exchange for goods and services, rather than merely as an jnvestment or speculation, is crucial. Despite Nakamoto's original (published) vision, Bitcoin became a rebel market play rather than a true currency in function and practice. That's what eventually made Bitcoin and also altcoins easy (and legitimate) pickings for regulators. Let's stay in touch.
I think that the speculators took their money out
Thanks for your perspective. There can be a fine line, I suppose, between speculation and investment, depending on one's personal definitions. The dramatic volatility of cryptocurrency markets certainly qualifies the realm as speculative.
Great observations out there from you @thegreatdane.
You are very kind. I am happy you enjoyed reading my post.