The price of bitcoins has often been compared to the biggest bubbles in history: the Dutch tulip mania in the 17th century, the Mississippi bubble in the 18th century and the mania of UK channels and railways in the 19th century – but perhaps the most popular comparison is the dot-com bubble of 2000.
In the space of five years, it seemed that any company with a ".com" after its name would provoke a food frenzy on the part of investors, which led to an artificial inflation of their value. When the bubble inevitably exploded, the implosion saw over 1.7 trillion dollars swept away by their market value a few months after the peak.
Since December 2017, bitcoin market capitalization has followed a similar trajectory, albeit on a much smaller scale. Two recent flash arrests within a week led to total bitcoin losses exceeding $ 250 billion, down 77% in less than 12 months.
But despite the similar model, market analysts believe it is wrong to make a direct comparison between the two.
"I would not like to compare the current state of the encrypted market with the dot-com bubble," said Angel Versetti, CEO of blockchain technology Ambrosus, L & # 39; Independent. "Although there are similarities in terms of new technological discoveries overestimated with unproven or unsustainable business models that have been incessant both in dot-com and in crypto, the scale of cryptographic and dot-com companies is not comparable. anywhere near a bubble with cryptocurrency.
"We are experiencing a strong correction, but the bubble has not yet formed: all bankers and financiers jump on the cryptic train signaling that the bubble has not yet arrived, I think that when all cryptocurrencies and tokens will have a value of 15-20 trillion of dollars this will be a bubble ".
Bubbles can only be identified in retrospect, so it may be too early to call the latest price collapse that bursts a bubble. Looking at the volatile history of bitcoin, the falls from the high end of 2017 represent only the fourth largest price adjustment in the history of the 10-year bitcoin.
The cryptocurrency experts also note that one of the biggest losses of the dot.com bubble was Amazon, which saw its shares fall from $ 300 in 1998 to $ 6 in 2000.
Amazon's share price is now more than $ 1,500, having become only the second company in history to reach a market value of over $ 1 trillion. This is due to the fact that it was basically a great business idea and eventually it was able to realize its potential.
"Naturally, commentators have made a comparison between the current bear market and the dot-com bubble of the years", "said Matthew Newton, an analyst at the eToro online investment platform.
"Although this is unavoidable, I would suggest that it is not particularly useful – it's a bit like proclaiming the end of the FTSE 100 at the end of 2008. One of the benefits of a bear market is that it eliminates people who are trying to make money fast, and they are not interested in the basic technology: those who understand the technology and see its benefits tend to stay, adding value to the market ".
In order for the benefits of the underlying technology to be attained and the price of bitcoins to stabilize and eventually rise again, many in the cryptocurrency sector have called for more regulatory control in order to increase investor confidence.
"Supervising the cryptocurrency" Wild West "will legitimize, and subsequently stabilize, the industry, which will enable it to reach the next level of maturity," said Herbert Sim, chief commercial officer of the cryptocurrency exchange Cryptology.
"Institutions and governments are beginning to accept that cryptocurrencies will likely become an integral part of the financial system. Regardless of price moves, it is clear that the cryptocurrency community is here to stay, with institutions offering new trading methods such as options, futures and margin trading.
"The last few months have seen the start of clear initiatives by the FCA and the SEC to build a coherent policy – it's just a pity that it took so long to get them on board."