There are many people that believe that the Bitcoin bull market was a bubble and that in 2018 said bubble burst and what was left was the continuous turmoil of the bear's grip on the market. But there was a silver lining of sorts, there was a lot of money and gifted individuals brought into the fleeting industry.
The head of research at the Bitwise operation, - the creator of the world’s first crypto index fund - Matt Hougan shares this sentiment who spoke to Barry Ritholtz on his podcast that “It was a massive run-up and a massive pullback. [It was a] total bubble.”
Even though the term ‘bubbles’ in the financial world usually have a negative meaning, Hougan believes that the Bitcoin bubble fueled some massive interest from the media in both the blockchain and the crypto market.
Furthermore, the increasing crypto prices introduced a huge amount of talented developers and designers who might not have otherwise taken advantage of such a booming industry.
With this in mind, Hougan says that the Bitcoin bubble isn’t too different from the Internet bubble in the late nineties which imparted similar collateral benefits to a then, rather empty industry.
“It did the same thing that happened with the Internet, which is it attracted a huge amount of talent. It did bring a lot of capital and interest in development to the ecosystem. So, I do think interesting things will be born from that. But, yes, it was a difficult year in 2018. I think [bitcoin] is the next dotcom. Remember, the dotcom bubble created Pets.com, but it also created Amazon.”
In addition to this, Hougan says that the majority of cryptocurrencies that are currently in circulation today will eventually fade into extinction, which he argues is a good thing for the market.
“There are 2,000 cryptocurrencies out there; 95 percent of them are useless and will die a painful death. The sooner that happens, the better. But from those ‘ashes,’ will merge important things. Just like from the dotcom ashes emerged Amazon, Google, and Facebook, etc.”
In one way, it’s a good thing that most crypto projects will fade out since this would make the market less saturated but as Hougan says, it is vital for the crypto space to eliminate all the fraudulent cryptocurrencies so that only the true, rightful ones remain.