Ari Paul, the founder of BlockTower Capital has recently compared current crypto market situation to the technology market crash in the early 2000s. This article is a shortened version of his tweet, full version can be seen here.
All of the current holders and investors are already used to unexpected market movement and don’t pay attention to sudden growth of the market leading assets and projects. Such currencies as Ethereum don’t surprise anyone with value raises during a bull market anymore, as it was with major tech companies in pre-2000.
That habit of overoptimism leads to huge disappointment and shock, when an expected bear run starts. People just don’t get how an industry changing product can lose its value. You can Google the Nasdaq’s 2000 case and see the story repeat with Ethereum.
Too much variety means nothing to choose from
There are too many projects, with similar ideas and each one of them is aiming to replace the older ones. Due to this race, focusing on some certain project may lead to unexpected losses during the bull run, when the market becomes over flooded with competitors. As said before, the same was with tech and projects in the early 2000s.
Amazon is still alive, though
On the other hand, such a player as Bitcoin will be liquid even a long time after. All the technology usually needs around 5 more years, than expected to become mainstream, so nowadays start-ups have a chance of becoming big. That, however, doesn’t include the projects that are already active and have their name even outside the crypto community. You probably don’t hear about Nasdaq that often, but you surely know what Amazon is - non-crypto bros don’t know why they need Aave, but they surely know what Bitcoin is and will still remember it for approximately 20 years from now.
The bull run seems to be right around the corner and everyone wants to be as prepared as possible - what to do?
Investors who succeeded in the 2000s used the strategy of having their money divided between the typical “value investment”, while also looking for newer projects and investing into them. Always hop on the trends and try looking at the market from the perspective on what problems need to be solved (Router protocol might be the thing by the way and no, this is not a financial recommendation).
Paul certainly has a point and we pretty much agree with his statements. However, we would still recommend checking out the original thread and especially the comments under - those do have some strong counter opinions.