The Great Crypto Recession is Here
I want to do something a little bit different lets. Look at what some of the most outspoken people in the industry are saying in order to determine, if were in the great crypto recession, or if this is some kind of temporary blip. First lets gather the context. How did we get here ill attempt to do it in 37 seconds timer, please. Thank you. Pandemic home for two weeks turned into home for two years government. No one is working heres, five trillion dollars; also government dont worry about inflation, us okay, that doesnt seem right, but youre the government. You know best supply chains, bad its hard to make stuff. Meanwhile, economy tanks then breaks records. Everyone is smart and rich government yeah. Sorry, we actually up inflation, pretty bad interest rates up markets crash congrats. Everyone is dumb and poor again time, anyways. Now that you essentially have a degree in macroeconomics, thanks to the last 37 seconds, we can analyze how this all essentially has happened before when have we seen a huge surge of investments pop up in a short period where it seemed like there was unlimited money and What mattered most was marketing, above all else. You guessed it beanie babies, these suckers retailed for like two dollars and fifty cents, but could sell for as much as five thousand dollars on ebay. Okay, im sorry im not actually comparing crypto to beanie babies, but i am comparing crypto to the dot com bubble and before you think, like yeah yeah, ive heard bubbles before just check this out back in the 90s, the world was completely different.
There was no social media and no one was getting swatted on twitch. The internet was in infant, only really accessed by nerds nerds. That became billionaires because 1995 came and a company named netscape made a far better browser than anything currently available. They went public and the stock doubled on the first day of trading. Seeing these dollar signs tons of other companies threw down their beanie babies and jumped into the dot com market and boy did they have supporters? Every investor was looking for itching for the next netscape, but most didnt invest for the sake of technology. The goal was to simply get rich, quick and get out of here, and it was working. You literally couldnt lose money for a while. Because of this, the companies who had the most publicity ended up with the most investors, not the companies with solid business models and welfare revenue streams. This led to bigger and bigger ideas and insane amounts of advertising. 17.Com companies had ads in the super bowl in 2000., and this was all fine and dandy. Until japan fell into a recession, markets started getting tighter, investors got spooked, they took their money out of riskier investments, and companies were then left relying on revenue to keep the door open, not investor money. Are you kidding me? We didnt sign up for this. We signed up for flashy growth, not solid income streams. So when the bad times started, you saw the largest and riskiest bets crumble.
First then, moving on to 2001, the u.s entered a recession and sayonara tech companies. Now they dont all disappear. Many of them, like amazon, take a hit, survive and then go on just to become behemoths, but that wasnt without losing more than 90 percent in stock price. First now i have to say that many of the ideas that exploded in the dot com bubble like in a bad way, ended up turning into successes years later, not the companies, the ideas, pets.com failed, where chewie succeeded, cosmo failed where instacart figured out grocery delivery, and This really stuck with me, because good ideas failed in the dot com bubble, its a good reminder that an idea is not enough by itself for a business to be successful in the case of the dot com bubble, the tech just simply wasnt there. Yet many of these companies lack the organization to get their big ideas done fast forward today and its eerily close to the crypto market inflated because of speculation and novelty tons of money coming in possible recession on the horizon and the rest. You already know, but i promise you im, not the only one who thinks this now real quick. I need to tell you about a sponsor of mine. Ftx ftx is a crypto and nft brokerage who recently added stocks to their platform, which is awesome if youre tired of having like 19 different apps to do slightly different things. Their stocks are zero commissions and their cryptos are extremely low fees as well.
I highly recommend checking them out linked in the description below. Using that link will save you an additional 10 for life. Now, one of the biggest winners of the dot com era was mark cuban hes, also a big investor in crypto. He sees strong similarities between today and the early 2000s back in 1999, he sold his internet radio company broadcast.com to yahoo for a whopping 5.7 billion dollars. After that, he went on to other lucrative deals, became the owner of the dallas mavericks and now tells people their presentations suck on shark tank. He says that crypto is in an imitation phase, and this is really interesting. He says the tech is there, but its not yet perfect its not yet actually giving businesses a competitive advantage, aka value creation, once value is being generated, the space will flourish once crypto projects are actually making businesses more money. The crypto project itself will establish its value and itll, be harder to collapse in price. Think about something like photoshop its not worth money, because its photoshop its worth money because of the money and time it creates for the businesses and people using it. We need that moment in crypto. Cuban goes on to say that we dont need more nfts or defy on every single blockchain. We need smart contracts actually offering services to businesses and people, and this is a point worth thinking about. Do you have an idea for a smart contract that could actually solve a problem? If so, now is the time to build it? Now is the time to do it now enough about cuban whats, his co star, kevin leary, saying about the current crypto market.
Oleary is a successful investor who sold his original business, the learning company to mattel for over three billion dollars again during the dot com era. It was a crazy time now, aside from being an investor hes involved himself in bitcoin and ethereum. This is what he recently said: the nfts have corrected. The las vegas side of crypto has had a nightmarish correction and i think thats very good in the sense that it helps separate the wheat from the chat. The traditional projects have remained relatively stable, sure theyve had a correction but thats the volatility that will be inherent in crypto until theres policy oleary thinks theres a lot of copycat projects that hold no real value, and this crash is going to take them out back and Shoot them leaving only the best projects to survive, but what about the future of crypto? We dont know which one of these projects is going to win. But the whole premise is that you want these for financial services and i still believe that in 10 years crypto will be the 12th sector of the economy, but all the existing tokens will not exist so in kevins eyes, good cryptos are here to stay and cuban Seems to agree, but not everyone feels that way and its a little bit worrisome. Peter schiff is one of those people. He has one of the bleakest opinions as to whats happening in the economy. Right now, and on this i have two major thoughts.
First, the man did call the 2008 recession way before it even began like two years before. So we have to give credit where credits due, but second schiff, who runs a gold fund, makes the most money when gold is doing well and gold does the best when the economys in a bad place. So there is a bit of an incentive for him to kind of want a recession which is something worth keeping in your mind either way. Schiff has never really been a fan of the crypto space heres a recent tweet of his in this he says, given the fact that prices of everything are increasing, this means people will be forced to sell their bitcoin to cover regular living expenses. Now that is a fair point, but also a point that could be made for really any non essential asset class right now in another tweet shift, says: bitcoin is headed to 20k and ethereum 1k and that this is not a dip you should buy. I will say in the days after that, tweet both bitcoin and ethereum did fall in price quite dramatically. But honestly, i dont know if hes right or wrong im, not here to guess prices of bitcoin a month from now. But there is one thing for certain: he doesnt deny that were going into a recession and that things look bleak for the crypto space and this is a sentiment shared by him, oleary and cuban. So what comes next for crypto heres? What i think crypto is tied to the overall market and economy, its looked at as overly speculative compared to something like bonds, gold or index funds, because of this, its the first to drop when theres any sign of economic stress.
I think investors right now are sitting in one of two camps: either one theyre new to the space and essentially giving up on crypto, at least for now, theyve lost too much money and too much hope or two theyre waiting for a sign that things will get Better, but with crypto attached to the overall economy, i dont think things will really begin to get better until we start seeing massive deals in the stock market. Right now were seeing some value plays in stocks, but nothing yet thats like a oh, my god. I cant believe how cheap that stock is once we start, seeing that people will slowly begin buying back then well have a big stock or two pop off going up like 20 in a week, and the market will begin to slowly recover, helping to instill confidence back Into the crypto space and money will start to flow back into that space as well, but the big issue is, we really dont know when that will happen. Is it two months six months a year? I wish i knew. I mentioned this in a recent video, but i think theres gon na be a large bankruptcy event that happens in the stock market. If this pressure continues, a company will pop, probably a big one, and that will cause even more panic in the short run. Creating some awesome deals, but in the slightly longer run itll act as this kind of relief valve for the economy.