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When sectors are so poorly regulated, and which take the forms of a financial far westface sudden growth, it is inevitable that sooner or later everything the house of cards collapses. It is enough for someone to decide that the time has come. This is exactly what happened with TerraLuna, the cryptocurrency-based lending platform – which at its peak had a market capitalization of $ 80 billion – which collapsed as savvy investors realized that stratospheric interest rates. interest were no longer sustainable by withdrawing their investments. The wave of mistrust has engulfed an already shaky industry after two years of euphorialeading the entire crypto sector to hit lows since January 2021.
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Who said the end?
Is it the end of cryptocurrencies? In reality, it is not said at all. From this point of view, the obituary recently made by New York Times offers clear indications through the parallelism with the dot-com bubble which, in 2000, had overwhelmed the nascent internet sector. “Some experts have long argued that the exuberant growth of the last two years it couldn’t go on forever, comparing it to the dot-com boom of the late 1990s. At the time, dozens of dot-com companies went public during the hysteria surrounding the great promises of the internet, though few of them were making a profit. When trust evaporated in early 2000, many of these dot-coms have gone belly-upleaving only the largest – like eBay, Amazon and Yahoo – standing”.
It is a parallelism much more flattering than it might seem. At the time of the 2000 bubble, the Nasdaq had exceeded 4 thousand points: today it is worth 11 thousand after reaching 15 thousand points last October. In 2000, an action of Amazon was worth three dollars and after the dot-com bubble burst it had lost 90% of its value. Today it is worth 113 (+ 4000%).
In short, if the end of this speculative euphoria will serve to do a clean sweep of the strangest realities and to bring out from the deck those with the most solid foundations, welcome: this is exactly what happened in 2000 with the first companies in Silicon Valley, then surrounded by immense skepticism and which then instead have changed the world (for better or for worse). It doesn’t necessarily happen in the cryptocurrency sector, but at the same time it would be foolish to rule it out on principle.
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The bear market
And this for two other reasons: first of all, enormous attention is paid to the collapse of cryptocurrencies (because, as always, it is more conspicuous than the others), but in reality it is the whole financial world that is crashing after two excessive years of financial euphoria. Shares of the Nasdaq are down 25% year-to-date. In the same time frame, some of Silicon Valley’s biggest giants have experienced cryptocurrency-worthy crashes: Mage lost 50%, Amazon 30%, Netflix an impressive 66%. Even the old Dow Jones lost 14%. Our Ftse Mib even lost 27%.
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