![]() ![]() īitcoin experienced a short-lived spike in 2013, but its true mainstream hype cycle happened in 2017. The crypto industry itself has gone through multiple hype cycles, each fueled by speculation on the back of new innovation triggers. The question now is whether crypto is in an analogous period of dejection akin to the post-tech bubble, or if this is all just smoke and mirrors without any underlying substance. Price multiple compression was the primary driver of the equity market’s initial decline in 2000, similar to what we just witnessed in 2022.Ĭrypto is facing a similar challenge, and it would be naïve to say the crypto market’s rapid valuation expansion over the last several years was driven by pure fundamentals over speculation. AMZN subsequently suffered a 94% drawdown in the depths of the dotcom crash, even as its revenue growth and market share expanded. At the height of the dotcom era, Amazon’s market cap was north of $34B before it surpassed $1B in annual revenue. But today’s corporate behemoths weren’t overnight successes. Like all hype cycles, speculation got ahead of reality, and fundamentals needed time to catch up.įast forward twenty years and the tech sector is now home to many of the largest and most profitable companies in the world. ![]() Inflated expectations stoked higher valuations, and when market conditions turned, these 90s high-flyers were hit the hardest. The dotcom frenzy of the late 90s culminated in one of the most infamous market bubbles of the last century. Innovation attracts a wide array of actors - some good, some bad, some in between.Īll innovation cycles start off being extremely speculative. But history is littered with examples of hubris (and even outright fraud). Now, not all entrepreneurs are created equal - this year we saw firsthand how an entire industry can fall victim to a select few who let ego or profits get in the way of progress and purpose. The ones who breathe life into those around them, creating waves of excitement with ripple effects that extend far beyond their own reach. We need the visionaries, the hungry entrepreneurs who see the sky as their north star, not their limit. The truth is there aren’t many people who are really driven to build boring products with boring use cases that offer boring returns. In fact, I’d argue speculation is more than beneficial - it’s imperative at this stage. Without speculation, capital wouldn’t flow to such risky ventures (and society would still be stuck in the Stone Age). Hype and excitement drive interest, which attracts capital, which gives entrepreneurs the resources to build innovative products leveraging new technologies. But, like most things, it sits on a spectrum. The term “speculation” tends to carry a negative connotation. For me, I spent the majority of my holiday brainpower thinking about the big picture: 1) because I’m a macro guy at heart, so I can’t help but think big picture, and 2) because I believe we could be on the cusp of a serious inflection point, one that could accelerate the trajectory of this industry and shorten the timeline for Web3 to really move the needle beyond today’s small (yet enthusiastic) user base.Ĭrypto has largely been a speculator’s market, and that’s still true today. ‘Tis the season where everyone predicts what next year - and the years to come - will bring. But long drawdowns have a silver lining in that they encourage deeper reflection, giving all of us a chance to re-evaluate what really matters and where we really want to spend our time. Every major tailwind that propelled the crypto market higher from Q2 2020-Q4 2021 turned against it, resulting in one of the sharpest and quickest price drawdowns we’ve seen to date.īull markets are where most investors make their money, and bear markets are where you fight to preserve those gains. We titled this year’s report The Great Reset because we believe that’s what 2022 represented for crypto - a great reset in prices, expectations, and speculative interest all across the industry. Navigate to any sector report using the Table of Contents above. This introduction was written by Co-Founder Kevin Kelly to share a few personal thoughts to prelude the full Year Ahead report. ![]()
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