Here's the biggest difference between the Dotcom bubble and the so-called Crypto bubble...
- The AVERAGE company on the Nasdaq had a P/E ratio of 200 during the peak of the bubble. Any value investor can tell you that they would never invest into a company with such a high P/E because it's highly unlikely that the underlying company will ever produce the earnings to justify that price. The massive price jumps were based on retail speculation alone, meaning people jumped in because the price was going up and they hoped it went up indefinitely.
The fundamentals of the Dotcom bubble necessitated a pop because outrageous P/E ratios are unsustainable. The companies will never produce enough earnings to continue to demand those high prices for a share.
- In many cryptocurrencies, like Bitcoin or Ethereum, there is no necessity to create earnings. The price is directly related to the amount of money in the ecosystem and the demand to be in that ecosystem.
Yes, there is a need for the systems to perform and keep up with demand for the platforms AND there is a need for the demand of the platforms to sustain and grow.
However, as long as the demand grows and the platforms can continue to feed that demand, the price can go infinitely high without popping. The key difference being that there's no earnings pressure. There is no unreasonable P/E.
In summation: Whereas adding money to the market cap of a stock does not make the company any more valuable in real terms, every person who adds money to the crypto market cap DOES make it more valuable for everybody. THAT's the key difference.
The crypto market CAN go away... If everybody stopped believing in the future of the blockchain and the value of these emerging technologies... But I see that as a hard sell, at least right now.
P.s. this is NOT a comment on the velocity of price movement and volatility. Anytime you see a price move to high, too fast in a market, you will see a "correction", because people want to take their profits. However, those fluctuations, as we're seeing today in ETH, are not the trend.