In the 1990s, the dot-com bubble drove a five-fold jump in the value of technology stocks and the Nasdaq index. But the bubble burst in 2000, leading to a crack up that felt like the end of the great dream of the internet.
But it was only the beginning.
The dot-com crash, and more importantly, its aftermath, taught us essential lessons about the challenges and opportunities of a bear market. Companies such as Dell, Cisco, Intel, Amazon.com, and eBay not only weathered the storm, they reaffirmed the conviction that promising technology sustains itself in the long run, weeding out unnecessary frills.
In many ways, the dot-com bubble is similar to the current scenario in the blockchain-cryptocurrency industry.
Investments In The Crypto Sector
There’s no doubt the crypto industry is going through a terrible phase. The market has lost $2T, about 67% of its value, since all-time highs in November.
While bear markets are considered a period of stagnant conditions, widespread panic, and low investor confidence, they are also an ideal time to build and to make investments. “The time to buy is when there’s blood in the streets,” said Nathan Rothschild, a 19th-century British financier and member of the Rothschild banking family.
Indeed. Smart money is continuing to flow into the crypto sector from retail and institutional investors to fund the industry’s latest innovations and technical developments.
For example, Andreessen Horowitz (a16z), the Silicon Valley venture capital firm, announced a $4.5 billion fund for blockchain companies in May 2022. This is not the first time a16z invested during a bear market. Four years ago, during the ‘crypto winter’ of 2018, the firm launched its first crypto fund worth $300 million. The partners at a16z firmly believe in blockchain technology’s potential and consider bear markets opportune investment moments.
Latest Technologies
Just as the dot-com crash created ideal conditions for groundbreaking Web2 innovations, the current bear market can be conducive to a similar story in Web3. Developers can focus on building the latest technologies rather than getting distracted by exorbitant price activities.
Andreessen Horowitz is not the only firm investing during a bear market. Binance Labs, the venture capital arm of one of the world’s largest crypto exchanges, raised $500 million to invest in Web3 companies. The firm intends to capitalize on the bear market to find dedicated developers willing to build the next big tech in Web3. Binance Labs will distribute its capital across pre-seed, early-stage, and equity, investing in project tokens and shares.