The main questions for crypto-watchers: Is this a complete collapse or one of the many up-and-down swings the tech world has seen for the last decade? The question for everyone else: If crypto does collapse, will that only affect people who’ve bought or used dogecoin, Bored Ape NFTs, or some other kind of crypto - a group that supposedly represents 16 percent of Americans - or could it create a “ contagion” that could wreck the global economy? If we knew, we’d tell you. ![]() On the other hand, if you bought a bitcoin back in 2014, when it cost around $700, you’re still well off today. On the one hand, the price of bitcoin and other crypto-related currencies and products seems to be evaporating very quickly: Last fall, a single bitcoin was worth $67,000 now it’s worth around $28,000. One wild card in this compare-and-contrast is the deflation of the crypto bubble, which is separate but very much related to the overall tech and stock bubble. It’s also worth pointing out that while the tech industry employs a lot of people - an estimated 5.8 million in 2021, according to the Computing Technology Industry Association - that represents only about 4 percent of total US employment. So while companies like Facebook, Google, and Amazon have all seen their shares tumble this year, it doesn’t mean their businesses are disappearing - just that investors no longer think their growth prospects are as compelling as they once were. The main one: Unlike the dot-com era, many of the most valuable publicly traded tech companies today are actual companies - they make and sell things people value, and usually make a profit doing so. And like the dot-com era, we’ve seen plenty of companies promise products and results they can’t deliver, like hydrogen-powered trucks.īut there are significant differences between 20. That’s the kind of collapse that could affect everyone, even if they don’t work in tech and don’t bet on stocks (or, more accurately, they don’t think they bet on stocks).Īnd there are certainly lots of parallels: Like the dot-com era, the stock boom, which began in 2009 and then super-sized during the pandemic, has been fueled in large part by very low to nonexistent interest rates, which made investors more interested in companies that promised to deliver outsized returns. In the dot-com bust that kicked off in March 2000, tech stocks eventually dropped nearly 80 percent. That sound is also a chorus of “I told you so” from people who’ve been comparing the bull market investors have enjoyed for many years to the dot-com bubble of the late 1990s - and who say things are going to get worse. "But a lot of the ideas that were around at the time would have worked had there been broadband.That screaming sound you hear? That’s the stock market tumbling, led by a collapse in tech stocks: The overall market is down 18 percent this year, and tech shares are down about 30 percent. "A lot of the business plans were deeply flawed," acknowledges Mr Simon. "At the time, I thought 'there's got to be a way of making money here', but of course I was wrong'."īut it is easy to be wise after the event.Īnd it is equally easy to forget that in fact there were plenty of good ideas around at the time. "I remember walking into a First Tuesday event at Lord's Cricket Ground, and there were thousands of people there creating a very special energy," recalls Mark Simon, founder of The Chemistry Club, which at the time brought together VCs with budding entrepreneurs. ![]() "It may ease off here and there, we may find the Nasdaq being a little overvalued at some point, but in general it's the way of the future," he said on 10 March 2000.Īnd how we all laugh as we look back at a time when the talk was more important than the walk, and when scruffy entrepreneurs were courted by greedy venture capitalists (VCs), their ties hidden in their pockets. "If you're an astute observer, your portfolio will reflect what's new and exciting and dynamic," he said at the time, insisting that "a lot of those are the companies that are in the Nasdaq".Īnother analyst, from the since collapsed Lehman Brothers, was equally eager to justify the Nasdaq's strength. Indeed, even on 10 March 2000 one analyst said: "A lot of people are tired of hearing about the new economy versus the old economy".Īt the time, the Nasdaq had risen 24% since the end of 1999 while the Dow Jones index of leading industrial shares had fallen 13%.Īnd the analyst, who was with Prudential Securities, was convinced the Nasdaq would smash through the 6,000-level within 12 to 18 months.
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