Every 20 years a crash

I was reading about the year 2000 Dotcom bubble this weekend and was shocked by the almost identical parallels to what’s happening in #crypto and #web3 right now. Eerie.

Here are a few things that stood out to me.

Retail investors

2000: New companies like eTrade and Ameritrade made it possible for anyone, regardless of investing experience, to buy/sell stocks.

Today: Companies like Coinbase, Robinhood, and NFT marketplaces are doing the same for another generation.

Maria Bartiromo said on CNBC back then: "It's not a professional's game anymore."

Robinhood's slogan today: "Investing for all"

Rallying cries

Every bubble has rallying cries to give people faith when what's happening doesn't make rational sense.

In 1999 it was: "This time is different"

In crypto today it's been: HODL

Both speak to ignoring any negative signals or fears.

Collective financial memories

Ken Galbraith (an economist) wrote, “The financial memory should be assumed to last, at a maximum, no more than 20 years. This is normally the time it takes for the recollection of one disaster to be erased and for some variant on previous dementia to come forward to capture the financial mind."

2000: It’d been roughly 20 years of YoY stock market growth as the bubble was inflating (i.e. the length of a generation).

Today: It’s been 20 years since the Dotcom bubble.

FOMO

In 1995, the S&P 500 Index returning 37.20% in a single year pushed more people to jump in and invest.

In the last 365 days, BTC has gone up 325% and ETH 948% (to take just the two main coins), and then there's NFTs…

Also... the S&P 500 has returned 33.8% in the last year, almost exactly what it did back then.

We'll see if history repeats itself but it sure seems like it's heading that way.