The blockchain is the new technology hype for which a lot of people who are interested in technologies have heard of, and most people have heard or read about it in the news, mostly as a result of its vast price increase last year – 2017. According to Google Trends, since the beginning of this year, the general interest in this technology went down significantly, show in the graphs below, where we can see the peak interest was in December 2017. Most of the people may be asking if this is the end of cryptocurrencies and blockchain. What is most significant, especially for investors, can blockchain, as well as cryptocurrencies survive the economic crisis that follows?
The number of searchers
As we can see in the graphs, the number of searches for Bitcoin and Blockchain follow almost the same pattern. In a couple of past months, the number of searches has decreased drastically, may be given to the drop in the Bitcoin value, from astonishing $20,000 at the end of 2017 to $6,400. But, one substantial doubt which may you have on your mind is if blockchain could survive a financial crisis. Given the technology of blockchain, the interest started growing only in 2010, also at the same time when the American economy was coming back from the recession, as well as some other countries it has only seen times of financial growth in the market as a whole. Currently, there are a lot of nations in substantial financial holes, such as Spain, Italy, and Greece, but we can say that the world is financially more stable now than it was in 2007/2008. And by the world, we think about the United States. But this is the case, as the U.S. is the largest financial market in the world, and anytime when it coughs, the society as a whole catches flu.
The history is repeating itself
If you search on Google about the coming financial crisis, you are going to see a lot of articles which are talking about what could probably be the next bubble or when it is going to happen. But, one is for sure, it is going to happen, we don’t know when or where it is going to start. So many indicators show that we are getting closer to the next crisis, one of them is the amount of financial regulation. Jihad Dagher, in one paper about this topic, talks about how economic crisis occurs when financial regulations are very lenient with banks, and how these same regulations are stringent right after the emergency happens.
It is critical as we have entered this stage of more leniency towards financial institutions. Donald Trump recently has also signed a rollback of bank regulations that were activated after the Great Recession. So, history will repeat one more time and go into recession within the following several years.
The next crisis is going to be the Cryptocurrency bubble
You have probably read a lot of articles talking about the Cryptocurrency bubble, and how it may destroy the economies of the world. The price of Bitcoin lowered under $1,000 to almost $20,000 in less than one year. That is not sustainable, but now prices came down below $7,000, and it looks like it will be a bit more stable, despite the drops from recently. As Bitcoin was the first of its kind, it still has a considerable influence on the price of all other coins.
Many think that prices are going to rise once again and that they will reach high levels one more time. The only concern that most of us have is the timing of this event. As let’s imagine Bitcoin reaches a $30,000 price, and expectedly most of the other cryptocurrencies are also going to be at all-time highs, but at the same time, there are some other financial tools on the brink of collapse. If the Bitcoin value increases slowly over time and reaches this price, then investors are going to be more confident to invest in it in case other financial instruments are going down. But, if the amount reaches some dramatic increase like the one in last year, then investors might withdraw the money out of the crypto market, as well as collapse it even further than it is expected. In this case, then it is going to be hard for most cryptocurrencies to come back. However, if all prices increase steadily, it could show investors how cryptos are here to stay.
The Cryptocurrency bubble could probably end most of the coins, mainly because a lot of them are just speculations with no working products. If the trust of the public is hurt because of a bubble, it is going to be hard to convince people to invest back in the technology.
But, if the crypto markets show investors that it is a substantial, as well as significant investment then a bubble in another financial instrument is only making cryptos stronger and more reliable.