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The state of the digital currency market is similar to that of the US stock market in the early 2000s; An overview of the hype cycle


The tech cycle, or the hype cycle developed by Gartner Research to demonstrate the acceptance of new media, has been used since the 1990s to quantify and predict the performance of pioneering new technologies. This cycle predicts the process by which a new technology will be introduced and then the initial turmoil will subside and, consequently, the rational growth of attention to that technology.

The Gartner Hype Cycle could well describe the dot-com bubble ups and downs of the early 2000s. The .com bubble points to the sharp rise in Internet and electronics stocks on the US stock exchange. Like the digital currency market in 2018, tech stocks in the US fell sharply in the early 2000s (averaging more than 70% in value), but after a while, companies that survived the bubble survived. They revived, and over the course of twenty years, trillions of dollars were added to the value of their stocks.

The state of the digital currency market is similar to that of the US stock market in the early 2000s;  An overview of the hype cycle
April 2000; Shortly after the start of the fall in technology / similar stocks in 2018 in the digital currency market

Now, in the heyday of digital currencies, many are wondering if applying this method to the digital currency industry can also help predict the market direction. an article The cryptocurrency website has reviewed this issue, which you can read below.

Hype cycle

Since the early 1990s, when the Internet began to flourish, every new technology has brought a lot of excitement. Although advertising has often been one of the most important factors in the adoption of technology, it has often obscured public perceptions of what was commercially sustainable in the long run.

Gartner, an American research and consulting firm, has developed a method known as Hype Cycles to help investors and people distinguish real-life noise. This cycle is a reflection of the maturity and acceptance of technologies and software and their relationship to solving real business problems.

The state of the digital currency market is similar to that of the US stock market in the early 2000s;  An overview of the hype cycle
Hype cycle

Each hype cycle summarizes the life cycle of a new technology into five main stages: the birth of innovation (or technology), the peak of expectations, the frustration slope, the rise of enlightenment, and the level of utility. The Hype cycle, if properly applied to new technology or software, can help investors better understand the position of technology and assess the risks associated with investing over a period of time.

But what does this often-controversial criterion, most commonly applied to the .com bubble in the late 1990s, have to do with the digital currency industry and how can it be used to quantify Blockchainchain acceptance, when the technology is nothing like what it used to be? Have we ever seen it in the market?

The similarity of the market trend with the hype cycle

Since the first bitcoin block was mined in January 2009, the digital currency industry has been on a path that can only be considered a rogue move. The dramatic ups and downs of digital currencies over the past decade have failed to convince the public that they are witnessing the emergence of a new monetary system, not a Ponzi scheme to overnight get rich.

Meanwhile, the media has convinced many in the fast-growing field of digital currencies, and only one article can create the size of a major recession in the transportation market.

Also, while the digital currency community has been debating with traditional financial marketers about the durability of these currencies for more than a decade, China’s blockchain technology has followed the same silent path that almost all emerging technologies have taken.

The birth of innovation in China’s blockchain technology began with the white paper or the introduction of bitcoin; A single event that created the effect of a wave of important events. This incident led to the creation of other digital currencies and ideas for other uses of the Blockchain.

The first phase of the hype cycle, while very exciting for the small population involved with this technology, often produces no usable product and has no proven commercial viability.

The same was true of bitcoin, which had basically no value; Until in 2010, the first Bitcoin trading platform emerged from the BitcoinTalk community. Until a few years later, prices fluctuated and bitcoin acceptance was low.

The second phase of the Blockchain was the pinnacle of expectations, in which early publicity revealed a number of success stories with almost the same number of failures. The second phase of the Blockchain began with Ethereum in 2014 and culminated in 2017 with the madness of buying new tokens, or the madness of ICOs. The period between 2014 and 2017 saw an unprecedented increase in Blockchain acceptance, with most of the increase in prices related to the retail market.

Ethereum made it easy for everyone to make tokens cheaply. Hundreds of millions and sometimes billions of dollars in floods of investments from all over the world flowed overnight into projects backed by just over a website.

However, the Wild West ended the boom in coin initial supply in 2017 as the Blockchaink entered the third phase of the hype cycle like clockwork.

The third phase of the Hype Gartner cycle – the slope of frustration – refers to a period of declining interest in which experiences and the implementation of new technologies fail to deliver on their ambitious promises. According to Gartner, this is where technology manufacturers, or in this case tokens exporters, are thrown out of the market.

Those surviving the earthquake will be able to satisfy early adopters by improving their products.

After the digital currency speculation bubble burst in late 2017, many projects failed and billions of dollars of capital were lost. In 2018, Gartner’s own analysis showed that the market had entered an upward phase of enlightenment, and the Blockchain was one of the rapidly declining technologies; Like automated driving and IoT platforms.

The state of the digital currency market is similar to that of the US stock market in the early 2000s;  An overview of the hype cycle
In 2018, the digital currency market bubble burst and many investors lost their capital.

With the loss of about 80% of the total market value, negative sentiments dominated the market and spread enlightenment both among the institutions involved in digital currencies and among micro-investors. It took almost two years for the market to fully recover after suffering the most devastating blow.

With the advent of defa (finance), the digital currency industry entered the fourth phase of the Hip Gartner cycle, the rise of the Enlightenment. In this recovery phase, examples of how emerging technologies will benefit companies for the first time begin to take shape.

According to Gartner, this is where second- and third-generation products appear in the marketplace, and low-risk companies begin to fund projects and implement technology.

Last year, the Defy boom attracted an unprecedented number of new users to the market, and for the first time, the influx of people into the digital currency space went beyond the promise of big profits. Third-generation digital currency projects such as Cardano, Polkadot, and Chainlink provide a glimpse of a technologically advanced future that many believe is achievable and sustainable.

It seems to be a reaction [دولت‌ها] With the controversial financial measures such as economic stimulus packages and quantitative easing (money printing), the global Covid-19 pandemic has not only reduced the confidence of small investors in national currencies, but also reduced the dependence of institutions on government currencies. Several large companies have invested billions of dollars in bitcoin to diversify their reserves and build capacity for high profits.

In exactly the same way as described in the Hip Gartner cycle, despite widespread criticism of MicroStrategy and Tesla’s “reckless” investments, the institutional leap to digital currencies shows that more and more companies are beginning to better understand these currencies. .

Entering the final phase?

The state of the digital currency market is similar to that of the US stock market in the early 2000s;  An overview of the hype cycle

Utility Level – The fifth and final phase of the hype cycle is where acceptance by the mainstream actually begins. Gartner describes this phase as a period in which the criteria for achieving the viability of a project are more precisely defined, and market usability is achieved by presenting it globally.

One of the main features of the utility level phase is the significant reduction of fluctuations and the adoption of a slower and more stable growth rate. Although it is possible to dispute the possibility of applying this feature in the digital currency industry, some of the most influential people in the industry believe that the digital currency market is in exactly the same situation right now.

Su Zhu, CEO of Three Arrows Capital, a Singapore-based hedge fund management company, said he believes the market is now in Gartner’s latest cycle. He explained on his Twitter page that this cycle will not be as short-lived as other cycles and will continue for years, bringing more than one billion people into the digital currency ecosystem.

This is not another cycle, this is the end of cycles
A cycle in which when bitcoin passes gold, it does not return
The one where Web 3 replaces Web 2
Where culture is not physically collected but accumulated digitally
Where life goes by thought, not by thoughtlessness

@zhusu

According to Zhou, the fact that the market has entered a level of profitability means that there is a high probability that we will no longer see a major market collapse like what we saw in March 2020 and January 2018.

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