Crypto Winter Is Here. But Where Is the Bubble?

It is official: The S&P 500 and other major indices have entered the bear market. As inflation continues to increase in the United States and around the world, the stock market has now joined other markets, including crypto, in what many experts have called “the everything bubble”. However, encapsulating all market crashes under the same category is arbitrary at best and delusional at worst… Especially when it comes to crypto.

It is often said that the crypto market reflects the behavior of public markets as general data suggest a correlation after accounting for the innate volatility of crypto. However, such an assertion ignores the fact that many cryptocurrencies differ in nature: While some are entirely speculative, many others provide utility. 

This difference is extremely important as the utility of certain coins provides them with innate value. As such, comparing utility coins like SOL or ADA with community-driven coins like DOGE could be a major mistake. While both coins will certainly be affected by global trends in the economy, their behavior will certainly be different.

The technical nature of blockchain and cryptocurrencies have also resulted in comparisons between its bubble and the dot-com bubble. This comparison is not new as it was also used widely back in 2017 when the crypto market crashed. The reason? The continued flood of investors centering their strategies and businesses around cryptocurrency with the hope of massive gains. Those who believe both bubbles are the same compare the investment in a cryptocurrency to the acquisition or dot-com domain in a purely speculative manner. 

While the 2017 crypto bubble was the result of speculative investments resulting from ICOs and other events, the 2022 bubble is entirely different. The crypto ecosystem not only has a bigger community now but it also has a large number of projects focused on creating value. Blockchain technology is being harvested by companies, developers, and individuals, which is reflective of the evolution of the entire space.

Events like Bitcoin Miami and Consensus 2022 show the increasing relevance of decentralized technologies in different industries like Fintech, art, e-commerce, cloud computing, and many more. The adoption of these technologies has been so overwhelming that regulators have failed to keep up with them.

Where exactly is the cause of the bubble the cryptocurrency market is currently experiencing? This is the question that Stefan Rust, Laguna’s Founder & CEO; Karim Nurani, Linqto’s Chief Strategy Officer; and Ido Sofer, ZenGo’s VP of Business & Strategy; tried to answer in the “Where Is the (Market) Bubble?” panel. 

The panel was moderated by Business Insider’s tech reporter Katie Canales during Grit Daily House at Consensus 2022. This and other panels are available to watch on Grit Daily’s official YouTube channel. If you are interested to learn more about the ongoing crypto crash, this is a panel you won’t want to miss!