Does history repeat itself? The dot-com bubble bears a striking similarity to the crypto crash and provides one major takeaway: time to trim the fat.
The economist Benjamin Graham, known to some as the father of value investing, once compared the market to a voting machine in the short run and a weighing machine in the long run. While Graham likely would have been skeptical at best about crypto and its built-in volatility had he lived to see it, his economic theory nevertheless applies to certain aspects therein.
So, what’s wrong here? Many prescient people have made life-changing money while playing the game, and the constant talk of funding and building potentially world-changing decentralized tech is the norm, so it seems like the space could be an ideal environment for founders and developers, right? It isn’t. These successes have often come at the expense of unsophisticated, desperately misguided investing rookies.
Why did those companies ever even gain favor? Simply because they had obvious names. If the brunt of investors don’t understand what they’re buying but want to join the party, why not pick a point-blank name?What’s more, the numbers are uncannily similar. Let’s put these in perspective: It then slumped to a low of $1.195 trillion. Accounting for inflation, that would be $3.27 trillion at the time of writing this.
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