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Dot Com Vs Crypto Bubble: A Glimpse Into Human Psychology and The Future of Bitcoin?

Tony Spilotro by Tony Spilotro
3 years ago
in Bitcoin, Cryptocurrency news
Reading Time: 3 mins read
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All financial markets are cyclical, including the cryptocurrency market. The price action of assets like Bitcoin, Ethereum, and even traditional assets like stocks or commodities, are driven by a complex balance of supply and demand, but also the psychology of each market’s participants.

A comparison between the late 1990s and early 2000s dot com era boom and the late 2017 crypto hype bubble show just how similar human psychology playing out in markets can be, and potentially offer a glimpse into Bitcoin’s long-term future.

Market Psychology Compared: Crypto Versus Dot Com Bubble

It’s not uncommon to see today’s crypto market compared to the dot com bubble of the early 2000s. Both were emerging technologies that offered untapped potential and promise and took the entire world by storm.

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Related Reading | 50% of Population To Use Bitcoin By 2043 If Crypto Follows Internet Adoption

Investors flocked to budding brands harnessing the power of the new internet technology in droves, driving up the price of stocks like Amazon long before the online bookstore became the wide-ranging digital brand it is today.

In a comparison against Bitcoin, Amazon’s stock performance during the dot com bubble shows a similar market structure – one that is highly driven by speculation and therefore, the emotional and psychological state of investors.

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Markets peak around periods of extreme euphoria, and once investors come down to reality form the high they were riding, oftentimes fear, anger, and even depression take over. All this before a long, drawn-out return to mean.

The charts shared demonstrate that human psychology rarely changes, and thus, markets typically behave in similar manners. As is the case with Amazon, so long as the underlying asset still has value, after a long period of consolidation, the asset can go on to rally once again, making the initial peak look like a mere blip on a price chart.

Remember Amazon vs. Bitcoin bubble pop tweets?

Human psychology and it not changing or whatever. pic.twitter.com/iwHBiQYjAY

— Charles (@CryptoCharles__) November 4, 2019

Amazon: A Glimpse Into Bitcoin’s Future?

Very few Bitcoin investors are buying up the scarce digital asset for what it can currently do, and instead, are speculating on its long-term potential to disrupt the financial industry and potentially replace the world’s fiat currency.

The same was true during the early days of the internet, during the dot com boom. Internet companies were a dime a dozen, each offering promise of future breakthroughs in technologies and user experiences.

The majority of the companies, however, died during the collapse after the dot com bubble popped, and from the ashes rose today’s giants like Amazon. But even Amazon was once nothing more than a bookstore, and not the digital powerhouse that it is today.

According to data, if Bitcoin follows the same pace as internet adoption, 50% of the world’s population will be using the cryptocurrency in some way.

Related Reading | Daily Activities Like Grocery Shopping May Hold the Key to Bitcoin Adoption 

At one point, the internet – like Bitcoin – was considered a fad. And although Amazon’s stock price crashed following the bubble pop, it went on to bring even invests who bought the absolute top of the dot com peak over 1669% returns at the recent highs set over the past year.

And just like the dot com bubble, many projects will die along the way, but those that offer real value will eventually grow to become the Amazon’s of the space.

Tags: amazonbitcoincrypto bubbleDot com bubbleStock Market
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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