In the past few years, we saw what the crypto craze did to the prices of crypto tokens. Bitcoin wasn’t the only one to reach an all-time high and drop to a crazy low. Other altcoins as well were brought to new heights by the increasing demand from investors. The crypto market reached a peak of a total capitalization of almost $800 billion just in January.
This incredible rise had many people wondering whether this phenomenon is a bubble. The crypto space is often believed to be the next ‘’dot-com crash’’ that happened in the late 1990s. Hundreds of companies suffered from this crash. Because it’s extremely difficult to find out what is driving the performance of the cryptocurrencies. It’s also difficult to predict how certain events can impact the market. These economic bubbles form when assets get traded at prices that are higher than their intrinsic values. The nature of the crypto market is highly speculative.
If we get to know the natural evolution of a disruptive technology, we will find out that with every massive speculative technology, there is almost always an equally large crash. Crashes are inevitable; this is why we always need to learn from past bubbles. The crypto space is seeing a lot of companies trying to tokenize everything without even the real need for a decentralized technology. This is how problems occur most of the times. The parallels with the dotcom bubble should always be a lesson to current stakeholders. We must take into consideration the aftermath of the dot-com bubble in order to remain successful.