If you are looking at the market fall of cryptocurrencies over the past two days, you must be thinking, that the bubble is about to explode. Yes, the bubble is exploding, but it has exploded before, and it doesn’t mean cryptocurrencies are going to disappear.
The first cryptocurrency bubble happened in January 2014. Bitcoin went over 1000$ just to return to the 200 range two months later
But it wasn’t only bitcoin, all other cryptocurrencies like Ripple had similar decrease in the same period.
Experts call this the “new paradigm” phase. The phase in which the market seems to accept there will be a new technological paradigm and invests massively, as we saw with the dot-com bubble and also with massive investment in bitcoin last year.
As the graphic below shows, those bubbles burst, but the good news is that markets always bounce back after a bubble from a face of despair into a return to the mean.
What we have been seeing, these last days, is the phase of denial. There will be a return to “normal”, but the big fall is yet to come. Nothing to fear.