- Cryptocurrency has been embraced by governments, institutions, and individuals — but it has yet to be adopted by the masses.
- As economists predict an impending economic crisis, cryptocurrency could either play a bigger role in international currency, or it could fall into decline.
- If the U.S. dollar becomes highly inflationary, cryptocurrency could be a popular alternative currency as it isn’t tied to a specific country.
- However, a catalyst would be needed to encourage consumers to use cryptocurrency for everyday transactions.
As the saying goes, “What goes up, must come down,” and nowhere is this idiom truer than in modern capital markets.
Since the U.S. declared independence from Great Britain in 1776, there have been 19 major market crashes, recessions, or bear markets in the U.S.
Each crisis and subsequent recession brought its own seemingly unique set of circumstances, but usually it’s a combination of the same old factors: excessive debt, market manipulation, excessivefinancialization, irrational exuberance (As former Federal Reserve chairman Alan Greenspan famously put it) — or just straight up fraud.
Regardless of the circumstance or era, the drama tends to play out in the same way.
First there is a major market run up. Next comes the peak of the bull market, during which a belief sets in that we’ve finally figured out this market. Finally, the crash comes — and all the fraud, deception, and financial chicanery are exposed for what they always were. Politicians rush in to the regulate the market and promise that this type of crisis will never happen again.
We start the entire cycle over with a fresh recovery and try to convince ourselves that this time is different.
But what if next time really is different?
In the last several years cryptocurrencies have gone from a niche for tech enthusiasts and anarchists to a thriving market with a fluctuating value. Last year saw billions of dollars being poured into research and development of blockchain technology and its associated digital assets. Everyday we hear news stories of how governments and businesses are grappling with properly utilizing and regulating cryptocurrencies.