Crypto Hits Puberty
May 13, 2022
Let’s be honest, there’s nothing good about puberty. It’s a period of time marred by acne, moodiness, confusion and a lot of volatility. We’ve all been through it. We survived. Most of us are better for it.
It’s interesting how much life and finance can look alike at times. If you’ve been paying any attention whatsoever to markets lately, especially crypto, they look an awful lot like puberty. It’s been turbulent. It’s been ugly. It’s been confusing and it’s been moody. The thing is, this isn’t the first time we’ve seen this movie and we should have a pretty good idea how this one will end.
In 1907, the United States had a financial crisis. It lasted about three weeks and in that time, stocks on the New York Stock Exchange lost just about 50%. In 1929, markets crashed again, kicking off the Great Depression. Fast forward to 1987 when markets crashed on Black Monday. Want more? Okay, how about the 2000 crash when the Nasdaq lost nearly 80% or the 2008 financial crisis when there was legitimate uncertainty the financial system could withstand what was happening.
Each of those crashes shared one important commonality. It wasn’t what caused the crash. It was the fact that markets recovered every single time. Not only did they recover, they went on to new highs. New companies raised money from IPOs. Investors made money. Not only did the financial markets survive, they matured and became more resilient.
We understand the consternation over crypto. It’s been a steep fall from grace. It’s been scary to watch. But it’s a part of the maturation process. It’s what any new asset category not only has to go through but arguably should go through at some point to prove its staying power. It’s the whole, what doesn’t kill us makes us stronger.
Is this the end of crypto? Probably not. Will there be casualties? Certainly. Some of the pets.com and books-a-million are going to wash out, as they should. Only the best of the best should survive so that each successive generation of assets created are stronger and offer better opportunities. It’s the circle of life.
This time in our lives will pass. It’ll become less tumultuous. The awkward stage will become a thing of the past. In the meantime, remind yourself what adolescence looked like. What it felt like. And remind yourself that whether it’s an asset bubble or pimple, they all pop eventually but life goes on.
Written by Dylan Ratigan and Josh Fabian
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