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Message: <blockquote data-quote="j.s.cox" data-source="post: 123723" data-attributes="member: 20454">Thank you [USER=16724]@RANDOTRON[/USER] ! That's a really interesting question. I think one of the key defining features of a bubble is that when it has burst, it does not reinflate. As such, I don't think this is a dot-com bubble moment for the crypto market for a few reasons (I am taking crypto market to mean its link specifically with cryptocurrency):<ol> <li data-xf-list-type="ol">This story should be considered on its specific facts. FTX made several deals earlier in the year to save other, smaller, failing crypto exchanges, which led to a series of losses and a liquidity crisis for the exchange. Binance, on the other hand, has not done this, and because they are no longer buying FTX, this specific issue should not be an immediate problem. As long as Binance acts sensibly and can weather this current storm, I believe that contagion fears are largely unwarranted. This does depend on Binance's next steps, however. </li> <li data-xf-list-type="ol">The technology behind cryptocurrency can be utilised for other things like the creation of NFTs. These have multiple uses, such as for smart contracts. There is an argument that focus could shift from cryptocurrencies to these other products, but I believe that as long as the underlying technology remains relevant and usable, cryptocurrency will remain relevant and an asset of interest. These technologies are still so new that it remains to be seen how far they can be pushed.</li> <li data-xf-list-type="ol">Cryptocurrency was already heading in a declining trend after its highs a few years ago. It is generally accepted that cryptocurrency is a highly volatile asset (despite its seeming stability a few weeks ago), and as mentioned above, the technology is still fairly new and still developing. Therefore, I think some investors will be using this opportunity to be buying crypto assets at a favourable price. Whilst it may not reach the highs of 2021, I believe it will still recover somewhat as this particular situation calms down.</li> <li data-xf-list-type="ol">Significant infrastructure has been put in place in banks and other businesses to accomodate cryptocurrency. This hasn't been placed without thought and careful planning. Unlike the dot-com bubble, I think people are well aware of the risks of cryptocurrency because of its history of volatility, so people have their wits about them much more than during the dot-com bubble. Cryptocurrency is already separated by the more respectable currencies (e.g. Bitcoin and Ethereum) and the less respectable currencies (e.g. Dogecoin). Stablecoins linked to fiat currency (e.g. USD Coin) have also been designed to remain stable in situations such as these, although arguably these stablecoins are more akin to derivatives than currency.</li> </ol>Despite this, there are arguments for a crypto-bubble:<ol> <li data-xf-list-type="ol">FTX was seen as a reputable crypto exchange. If they can fall, so can other exchanges. Despite this, as I outlined above, their specific actions caused their downfall and this has not been repeated by Binance.</li> <li data-xf-list-type="ol">FTX and Binance had been engaged in a childish and bitter rivalry driven by ego around market share. Binance said that it was no longer acquiring FTX after "due diligence" revealed issues they could not mend. There is a serious question about whether this was a statement made to hurt a rival, or whether Binance had fully thought this action through. If it was the former, this may be the start of a crypto-bubble.</li> <li data-xf-list-type="ol">Faith in cryptocurrency has been wavering for some years now. This could very well be the straw that breaks the camel's back. Businesses have only just begun investing in crypto capabilities, so they may be willing to stop now and cut their losses.</li> </ol>Overall, I think this is a turning point for the crypto market, but I don't think there is necessarily a bubble that is bursting. Perhaps we will see more regulations come into place (although this could be difficult considering crypto market decentralisation)? Perhaps those in control of crypto exchanges will be more cautious about potential acquisitions? Perhaps clients will demand greater transparency about counterparty risk? Due to their dominance, I think the crypto market's future is in Binance's hands. If they can make it through, I think investor nervousness will cool down.</blockquote>

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