Analyzing Bitcoin’s fall from grace is a tough task. Numerous opinions are floating around the industry, and experts seem divided when discussing the future of the world’s most prominent cryptocurrency and the reasons behind its marked collapse, one that saw its price go from nearly $20,000 in January 2018 to less than $3,400 at this time.
According to Matt Hougan, who currently acts as the global head of research at Bitwise, the bull market that took Bitcoin to be worth that much at the start of last year was a bubble that burst in the following months. However, he states that it may not necessarily be a bad thing, as the events that took place attracted lots of attention, money, and talent to an emerging industry.
“It was a massive run-up and a massive pullback. It was a total bubble,” he observed in Bloomberg’s Barry Ritholtz podcast. It is understandable that the word “bubble” brings a negative tone, but Hougan clarifies that the fact that the collapse of Bitcoin brought so much media attention is positive for the blockchain and crypto fields.
Comparing Bitcoin with the Internet Bubble
In fact, Hougan compares what happened to Bitcoin and altcoins’ prices to 1996’s Internet bubble, which caused similar collateral benefits. “It did the same thing that happened with the Internet, which is it attracted a huge amount of talent. It did bring a lot of capital and interest in development to the ecosystem. Hence, I do think interesting things will be born from that. But, yes, it was a difficult year in 2018,” he conceded.
Hougan also made it clear that he thinks Bitcoin is “the next dotcom. Remember, the dotcom bubble created Pets.com, but it also created Amazon.”
However, the specialist warned society, investors, and the community in general about one of his predictions: he thinks that 95% of the cryptocurrencies that populate the market today will disappear, and that it would be a positive outcome.
“There are 2,000 cryptocurrencies out there; 95% of them are useless and will die a painful death. The sooner that happens, the better. But from those ‘ashes,’ will merge important things. Just like from the dotcom ashes emerged Amazon, Google, and Facebook, etc.” Hougan’s words imply that the crypto markets need to eliminate all the useless digital assets, so that the worthy ones can flourish.
Bitcoin is “Millennial’s Gold”
The expert also referred to millennials and their approach towards cryptocurrencies: they are fond of them as a way of investment, and prefer them to gold, for example. “Every generation has an asset that they love or a way of getting exposure that they love. The Greatest Generation love gold, then people loved active mutual funds. Gen X loved hedge funds. Millennials love crypto,” he recognized.
According to Hougan, younger generations like the primary benefit of crypto, which is the opportunity of cutting off the middle man and managing their assets themselves, which is a result of crypto’s decentralized nature.
Speaking about the recent market’s fluctuations, Hougan says that the most widely recognized enterprises, such as General Electric, Apple, and Amazon, had to endure significant stock market swings on the way to being successful.
He says that Bitcoin is far from dead. “Bitcoin’s gone through six or seven, 70 percent-plus drawdowns in the past. And each of those has set the stage for a new rally. I’m not saying that will necessarily happen here, but it’s down 70%. It’s up 300% over last two years. So it depends on your perspective.”
By Andres Chavez