Highlander Rules: There Can Be Only One... Dot Com Bubble

This is the post that taskmaster wrote in response to a comment on his previous post. Fun how that happens. Get a free post based on the content of a comment to a previous post. Happens all the time. Free content to talk about and earn rewards on. Let the good times roll: this one still has momentum.

Some highlights:

In the last post we covered how cryptocurrency has its dot-com moment and now it is time to get building. This is something that is often disputed, as it was in the comment section.

Okay, well, first of all, this makes it sound like I... don't think we should be building? Interesting tactic of adding in an indisputable fact after the point of contention. We are always building. We are never not building. The same amount of building is going to occur no matter what the market does. It is known. Of course it is nice to have a bear market flush all the bullshit out of the space. That doesn't make a bear market THE DOT COM BUBBLE.

This argument truly has me flabbergasted.

I wasn't bothered when I first read it, but now that I'm responding to it I'm like... WHAT? How could anyone make this argument? The 2018 CRYPTO WINTER was way way way worse than the current bear market (and even that wasn't a DOT COM moment). How easily people forget. If crypto already had its DOT COM moment, then it was obviously in 2018 and not this silly little retracement we just saw that only lasted a couple months.

Maybe I should stop trying to fight the current?

People are always always always going to talk about the DOT COM bubble every single time a bear market comes. Every damn time. Why fight it? Just let it happen. It's cool... they can be wrong. Let them be wrong. A DOT COM movement can only happen one time. Not every four years. Seriously though... the DOT COM bubble itself lasted ten years. It's going to happen to crypto as well. Only a matter of time.

So what can we expect to see during a real DOT COM moment?

There can be only one.

Guess what mile-markers we will see on the way:

Mainstream adoption
All corporations worldwide FOMOing in.
All governments worldwide FOMOing in.
All banks worldwide FOMOing in.
All people worldwide FOMOing in.
This could take around 5 years before inevitable dump.

Seriously though, think about it.

I already tried to make the argument that institutions had strong hands and wouldn't FOMO into Bitcoin just recently. Guess what? I was wrong. I was so wrong. Everyone is going to FOMO in when we get out of this sad testnet phase of crypto and onto the real deal. Everyone.

Crypto stands poised to upend the entire financial system... but we already had our DOT COM moment in these early infant stages? Wut? GAH! I can't right now. Refuse to can.

How high can crypto go before DOT COM level crash?

Well, when you see an asset class doubling in value every single year, how far can you project into the future for a long-term hold? How much can one FOMO in now and tell themselves "it's fine because this is a ten-year hold"?

Trillions upon trillions upon trillions.

And because everyone who already has the asset is FOMOing as well, no one is selling, which means the trillions of dollars pumped into the market can increase the market cap of crypto by hundreds of trillions (because no supply left but huge demand).

The corporations and banks and retail and governments that FOMO in at the ridiculous prices? They'll just justify it by saying "it's fine if the market crashes because this is a ten year hold". Which implies that a real DOT COM level bubble for crypto takes us to around x1000 the price is should be. It's the inception of MEGA BUBBLES.

Mega bubble within a mega bubble within a mega bubble

A regular mega-bubble takes us 10x above the doubling curve trendline. A DOT COM level pump/dump needs to be much much bigger than that. I'm thinking like three of them stacked up in a row, which is x1000 on the doubling curve. At least two of them in a row which would "only" be x100 (boo hoo). These are the insane unsustainable levels that Bitcoin's idiotic deflationary model will give us. Be on the lookout for tokens with elasticity that can try to absorb some of this volatility. Hopefully I'll build my own. No promises.

I never get to use nested quotes!

Before going further, we have to look into the article linked in the comment. Here we see some immediate flaws.

This was the conclusion.

So many of the dot com companies provided an empty, needlessly redundant service with high overhead and poor management. These are problems that we don't have to worry about. Its much easier to manage a dev team than an entire corporation especially when the foundation of your project is built on top of a tried and true platform that another team is constantly improving (Ethereum and friends).

As it turns out, we are seeing projects going under all over the place. Business like Celsius are filing bankruptcy while projects such as UST and LUNA are under investigation (as well as being on life support).

Yes, exactly... BUSINESSES like Celsius.

Not cryptos like Celsius.
Not communities like Celsius
Businesses (corporations).

So the argument being made here is: @edicted is wrong about cryptos going under because scam corporations with terrible business models are going bankrupt. What? How? Why?

Seriously though... many called out the LUNA/UST crash before it happened. I took one look at that bullshit years ago and did zero research on LUNA because it was dead on arrival. Too bad it went x100 and everyone lost everything. It was so obvious that scam was scam. Their debt-ratio was over 100%. Can there be a more obvious indication of scam and overleverage? How is that a relevant example to the contrary? It's not.

So many of the dot com companies provided an empty, needlessly redundant service with high overhead and poor management. These are problems that we don’t have to worry about.

Oh shit look at that he's doing the thing.

Pulling on that 1% thread, I see. I didn't think I needed to lawyer up on these generalizations. We have to look at the context of the post itself. I published this in 2018. I've already been proven correct a thousand times over. Is crypto littered with scams that provide "redundant unsustainable services"? I mean... sure.

The macro argument given in my original post needs to be placed in context. The context is 2018: the most brutal crypto winter where all the BTC MAXIs are saying that every alt will die and Bitcoin will reign supreme. I made the claim that the opposite would happen. I was right. There is no argument. It already happened. We've simply circled back into the same loop as 2018, except this time isn't nearly as bad as back then. Not even close. Obviously we need to give it another year before this is proven true, but I think it will be. Here it is on-chain, etched in immortality.

Are we really trying to make the argument that there isn't going to be another 80% retracement?

Because, I mean... that's obviously going to happen again in less than 5 years (unless we start a real DOT COM bubble cycle, in which case the retracement will be more like 95% and take 10 years).

I mean surely there is something to be said for all these scam exchanges going out of business. They gambled with customer funds then stole those funds when they went under. Possible that this never happens again because of regulations. But again, regulations only apply to corporations, and that has little to do with crypto. Doesn't matter if the corporation is one that deals in crypto.

Back to the taskmaster post...

The Internet in the late 1990s was still mostly an American platform. There was some activity from other parts of the developed world yet the majority of development was from the U.S. It was not the global mechanism it is today.

Most people were technologically inept.

Look at the crypto noobs running around these days.

It's just as bad if not worse than it was back then. In fact it's a thousand times worse because fuckups in crypto can lose you your life savings instantly. That wasn't a threat during the 56k modem days.

Most of the money and development for crypto?

Yes... you guessed it. Comes from the USA. Everything is in the English language. There is no dispute. The similarities between crypto and the early internet are vast, and something that Task talks about often, but then somehow in this context it's being flipped and is totally different? Hm, k.

With the Dot-Com era, the baseline was nowhere near the hype. If we were in the Stone Age with this technology, why did the market price it to a point where it would take a decade to return? This is how big the bubble was.

So the argument being presented here is that crypto can't bubble as high as DOT COM because the baseline is higher. I'd say this is provably untrue. Not the baseline part. The baseline level assessment is spot on: it's the hype assessment that is incorrect.

The Internet was unilaterally controlled by the entities that crypto seeks to disrupt. Crypto is what the Internet should have been when it was invented, and the geniuses that built it knew that all the way back in 1976 when they posed the Byzantine General's Problem, which remained unsolved until Bitcoin in 2009.

If we make the argument that the baseline bar is ten times higher, in order to make the case of a DOT COM level mega mega mega bubble, we must also argue that the hype will have to be at least ten times greater. Is it? Is the hype of disrupting every nation state, bank, and corporation in the world perhaps a little more hype than email access and Amazon service and everything else we do on the Internet? Like, obviously? Right? That's not x10 the hype, that's x1000 hype, which is exactly where we need it to be in order to get those absurd valuations.

Institutions are still in denial.

They still think they can create their own crypto. They still think they can do CBDC and "enterprise blockchain". At the moment of capitulation is when they all FOMO into the real decentralized networks that are taking over. We haven't even come close to that moment, but the tipping point is out there somewhere. When it comes the snowball will gather mass very quickly.

This is vital for development. Unlike the previous era, applications are built by people all over the world. This does not have to come from the corporate realm either. A kid sitting in a bedroom in India has an equal chance of producing an app that is used by 100 million people as someone in Silicon Valley does.

Sorry, isn't this undermining the original argument that crypto can't have a DOT COM bubble? If crypto allows anyone to create value instead of the centralized elite, then exponentially more value is created. If exponentially more value is created, then the result is exponentially more speculation, hype, leverage, and FOMO. Right?

With blockchain and cryptocurrency, we see participation taking place on a global scale. This will only accelerate the increase in the technological baseline. Network effects happen much quicker today as compared to 20-25 years ago.

Oh... I see

So because the value being created is real value, this increases the baseline, and thus the hype becomes muted and can't go as high. Except there is no limit on hype. The ability to leverage and go long ensures that speculation and hype will always grossly overvalue assets like this, no matter where the baseline is. To assume the greed and hype will just fall away as we travel on this baseline? I'm not buying it.

If 100x more value is being created, people will just gamble on it 100x more aggressively. It is known. There is no limit on speculation as is being implied here, especially when the assets and networks themselves ARE MONEY. Not just regular money either. SMART MONEY. Money that can be programed to do anything. Think about it. As if crypto can't be programmed to speculate x1000 times worse than before? We already saw that with DEFI. DEFI isn't going anywhere.

The way things are going, it is likely that confidence in governments keep waning. This is going to create a challenge for them as people decide to switch to alternatives that offer potential as compared to the failed systems that governments keep pushing.

And thus the alternative solutions become overhyped... leading to a mega bubble the likes of which we've never seen. So many conflicting variables here it's hard to keep them straight. Thanks for making my point for me I guess.

In Conclusion
When we factor in the technology baseline, the ability to hype to absurd proportions wanes.

This is simply not true. The opposite is true. It's the reason why crypto can have thousands of scams. The true value of crypto funnels billions of dollars into the scams, bloating them until they implode from a bear market. There's no reason to assume this isn't going to happen on a level several magnitudes higher than what we see today.

The technology baseline going up at such an absurd rate is exactly the thing that's going to make the speculation that much more absurd. Watch what happens when Apple and Google FOMO into crypto just as hard as Michael Saylor did. Watch what happens when governments and central banks do the same thing, within the exact same bubble. It's gonna bubble, then bubble again, then bubble again. That's the real DOT COM moment.

This idea that 300M people use crypto is absurd. Go talk to 100 people, ask them about crypto and how involved they are. Most still think it is a scam (especially during scam season aka bull markets that just turned bearish). Most people are not involved. The ones that are? These 300M "users"? They have a Coinbase account and they hold $500 worth of Bitcoin through a centralized custodian. They don't know shit and that doesn't count.

Just wait what happens when they're getting paid to learn within the attention economy on a real decentralized network. This "300M people are crypto users" bullshit is at least x10 overblown, probably more. At least 90% of these people still only know how to use email/password logins and connect their bank account to a centralized exchange. That's WEB2 bullshit. It's meaningless.

Crypto is going to start offering real jobs. Jobs that pay more and offer more benefits than corporate jobs. The corporations won't be able to compete with the jobs crypto is offering. Thus, many corps will be forced to capitulate and buy as much real crypto as they can (not some bullshit enterprise blockchain that they control) while building on top of these networks to capitalize on them and stay in business.

How many jobs does crypto offer now? Basically none compared to what it will be. I can not overstate the level of hype we will be dealing with when this thing kicks into high gear. x1000 valuations above the doubling curve. Say it happens in 2028. Doubling curve says Bitcoin should be worth $3.3M a coin. x1000 that. $3.3 BILLION dollars for a single Bitcoin. This is how absurd the valuations can get when every institution in the world is capitulating into a system they don't control.

We haven't even come close to seeing a DOT COM bubble in crypto. It's obvious. It won't happen until every single institution in the world realizes they need to pivot or die, and fighting it is no longer an option. We are so far away from that moment... Seriously though. We are a literal war away from that moment. A long and brutal one. Hopefully mostly non-violent. No promises.

Conclusion

I win again!

At the end of the day it was the easiest post to debunk ever.
Crypto will never have a bigger bear market?
That's absurd.
We already did.
It was 2018.
This was one wasn't even that bad.
$20k was the obvious bear-market retracement level.
There's no reason to assume this won't keep happening.
How many DOT COM bubbles can there be?
There can be only one.
It hasn't even come close to happening, yet.

_{I really went off the rails here.

I didn't mean to.

These things happen.

It's been a while.

Time to chill.

Thanks for the free post @taskmaster4450.

Apologies for the needless escalation.}