Where Were You as the Cryptocurrency Market Quietly Gained $100 Billion?
Whenever I read a grand, sweeping statement that attempts to characterize a major technological trend in some definitive tone, I always think back to some of the other definitive, concrete statements made on the topic of rising technologies over the course of modern history.
My favorites are those that didn't age too well. Here are some of the best examples:
1903: “The horse is here to stay but the automobile is only a novelty — a fad.” — President of the Michigan Savings Bank
1946: “Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.” — Darryl Zanuck, co-founder of 20th Century Fox
1961: “There is practically no chance communications space satellites will be used to provide better telephone, telegraph, television or radio service inside the United States.” — T.A.M. Craven, Federal Communications Commission (FCC) commissioner
1977: “There is no reason for any individual to have a computer in his home.” — Ken Olsen, founder of Digital Equipment Corp.
1981: “No one will need more than 637KB of memory for a personal computer. 640KB ought to be enough for anybody.” — Bill Gates, co-founder of Microsoft
1981: “Cellular phones will absolutely not replace local wire systems.” — Marty Cooper, inventor
1995: “I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” — Robert Metcalfe, founder of 3Com, inventor of Ethernet
2007: “There’s no chance that the iPhone is going to get any significant market share.” — Steve Ballmer, Microsoft CEO
It's easy to look at these today and laugh, especially with industry titans like Bill Gates and Steve Ballmer throwing out two of the biggest turkeys of the bunch, but the reality is hindsight and foresight are two very different things.
Which is why when all of the mainstream analysts, pundits, and talking heads were pounding the table and screaming that the cryptocurrency market would collapse and turn to dust, I took that wisdom with a grain of salt.
Yes, it was true, the entire market was overbought. Perhaps that's a bit of an understatement. The cryptocurrency market was on a six-month Keith Richards-caliber bender, sucking up the hopes and dreams of starry-eyed investors like a parasitic blob from another world.
Ahead of the pack and carrying most of the momentum was Bitcoin, which we watched soar by 2,000% over the course of 2017, hitting unimaginable peaks of nearly $20,000 before finally losing steam.
Of course, as the mania took hold, another force was rising to balance it out... and that was the tide of negative opinion.
For Every Action, There is an Equal and Opposite Reaction
Proving once again that Newton’s third law applies to everything in the universe, that negative sentiment arrived with the same strength and momentum as the mania that spawned it.
“This technology is flawed, it’s flawed in the sense that it opens itself up to be manipulated. It’s like the perfect storm for manipulation. I see a classic pump and dump happening now where there’s a dump on bitcoin going into the next one which is Bitcash.” — Jordan Belfort, Wolf of Wall Street
“If you're stupid enough to buy it, you'll pay the price for it one day.” — Jamie Dimon, CEO of JP Morgan Chase
“It is not a stable source of value, and it doesn't constitute legal tender.” — Janet Yellen, former head of the Federal Reserve
Eventually, this sort of talk was vindicated by what most of us were expecting: a massive correction.
Between the peak, which took place this past January, and April 1, the total value of the cryptocurrency market plummeted more than 70%, from $835 billion to $243 billion.
It sent those talking heads into a slow, perpetual, “I-told-you-so” saturated nod.
It was all over. Not just Bitcoin, but Ethereum, Ripple, Bitcoin Cash, and almost every altcoin you've never heard of lost more than half of its value.
Investors were swooning. Detractors were basking in schadenfreude. The whole thing was looking like the one of the first and most famous bubbles of all time: the Dutch tulip craze of the mid-17th century.
This has been the anti-crypto crowd's go-to historical comparison — one they started wheeling out the moment crypto speculation hit the headlines in early 2017.
For Renaissance-era Dutch speculators, the mania ended in a total collapse, and, from the looks of things, this mania was following the exact same pattern.
The thing is, though, the tulip craze didn't end in a total collapse.
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The Most Famous Bubble Never Actually Burst
Almost 400 years later, the Dutch tulip market is still enormous, producing more than 2 billion bulbs in 2017.
You might not hear about it too much, unless you're in the horticulture business, but tulips are so important to the Dutch economy today that the greenhouses where they're grown account for close to 10% of the nation's total power production.
Simply put, tulips are now mainstream — so ingrained in the history and economic workings of the country that people hardly even notice them anymore.
The same exact thing happened during the dot-com “bubble,” when internet companies experienced a merciless culling, only to come back stronger than ever.
With internet and cellular technology being great modern examples of the mania-crash-recovery-mass adoption cycle, the mainstreaming of cryptocurrencies was just as inevitable as the crash itself.
Over the course of the last week, while the world focused on tariffs and gas attacks and cruise missile strikes, the cryptocurrency market cap almost unnoticeably regained more than $100 billion in value.
That's a 45% jump in less than two weeks.
In fact, it's gained more than $3 billion since I started writing this article.
If history proves to be any sort of indicator, in the next couple years, we're going to see a gradual but unstoppable pattern emerging — one far more stable, and therefore sustainable, than the pattern that has defined the crypto market for the last 18 or so months.
We're going to see many of the products out there fail and vanish, while those that remain will eat up bigger and bigger chunks of the pie.
Old favorites, including the granddaddy of them all, Bitcoin itself, will probably fade away, while new ones that few have heard of today will rise to dominate.
Second-Wave Crypto Investing Could Mirror the Internet Revolution
For those who missed the manic phase of crypto investing, this second, mainstreaming wave is the real light at the end of the tunnel because in the long run, it will take this $350 billion market and grow it far bigger than it ever was during the early parts of the cycle.
I'm talking about a total market worth multiple trillions, with applications far more numerous and diverse than they are today.
For months now, I've been studying this pattern and looking for ways to get the most out of it.
I've isolated one cryptocurrency in particular that falls into the altcoin category, meaning you've probably never heard of it.
As the market restructures itself, however, I believe this early-stage digital coin is an excellent candidate for mainstream prominence.
We could be looking at percentage gains in the four- or even five-figure range, but only if the timing is just right.
Since cryptos started their bounce, this particular coin has more than doubled its lows, so I'm guessing the timing is now.
I recently published a report that details my findings and explains why this cryptocurrency has the potential to land today's investors gains similar to those early Bitcoin investors were cashing out earlier this year.
Don't waste another minute wondering if cryptocurrencies are just hype. They're not. That was last year.
This year, they're well on their way to becoming a crucial component of our monetary system.
Fortune favors the bold,
Coming to us from an already impressive career as an independent trader and private investor, Alex's specialty is in the often misunderstood but highly profitable development-stage microcap sector. Focusing on young, aggressive, innovative biotech and technology firms from the U.S. and Canada, Alex has built a track record most Wall Street hedge funders would envy. Alex contributes his thoughts and insights regularly to Wealth Daily. To learn more about Alex, click here.
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