Crypto Crash Faster and Harder than Dotcom Crash: will a Global Crisis Follow Suit?

The great crypto crash of 2018 is now with -80% bigger than the dotcom crash by -78% a few decades ago, according to Bloomberg. Not only is the crash bigger, it went also much faster: in less than a year instead of over the course of 3 years. And the bears are still in the market, so the market can continue to crash further and overtake also the previous bitcoin crash record of 2014/2015, when the bitcoin collapsed by -83% from its peak of 1155 USD to just 193 USD. Comparing the duration of the collapse of bitcoin in 2014/2015, it is in my opinion highly likely that the bears will be in the crypto market for a few more “winter” months.

Prelude to Recession?

The dotcom and subsequent telecom crisis, were also a factor in a wider economic recession in the early 2000s, killing the believe in the new (recession free) economy. As a significant portion of households had invested in crypto tokens, will the great crypto crash be the prelude of a general economic recession as well? Given the length of the current economic boom cycle, that might well be so. The believe victim, this time around, can well be the almost religious dogma of crypto die-hards that a fully decentralized world order will overtake the highly centralized one.

Recovery in 3 to 5 years?

The Nasdaq recovered after 15 years from the dotcom crash. Given the cryptos’ higher volatility, could that imply that the crypto market will fully recover within 5 years? If we take the analogy of the bitcoin crash of 2014/2015: it took then around 3 years to fully recover in the beginning of 2017.

Again a new class of cryptos?

The analogy with the bitcoin crash versus the great crypto crash versus the dotcom crash has one more lesson for us: it’s not the same assets that make good on lost territory. After the bitcoin crash, we got a legion of altcoins, still with little or no intrinsic value. Not all the dotcom listed companies survived the dotcom crisis, many went bust or where swooped up by rivals, only the greatest companies like Google, Amazon, Ebay and Facebook thrived. Will we now, again, get a new class of cryptos with real intrinsic value? Stable coins for payment, share tokens to represent financial assets approved by the likes of SEC, great utility coins for super-efficient ledger services, etc.? I strongly believe so! We have 2.5 years to get serious. It’s why we continue to work hard on the ICURY, piloting distributed ledger tech (dlt) infrastructures, and investing in R&D-ing the right recipe for a great utility token with stable coin characteristics.

Martijn Hoogeveen

Founder and CEO of Icecat NV. Investor. Ph.D.