Blockchain Bubble in the Making? Memories of 2000 Tech Bubble

As the ICOs continue rolling out with millions of dollars being raised it begs the question if this is the beginning of a blockchain bubble. In the last week, we have seen the price of Bitcoin and Ethereum move all over the place.

Take a look at the Bitcoin chart, courtesy of http://www.coindesk.com/price/, for the last week.

The price has been all over the place going as high as over $2,700 and back down to $2,000. Ethereum has been just as volatile. Is this just another frenzy like the tech bubble back in 2000-2001? On a personal level, it brings back some bad memories.

Blockchain Bubble vs. Tech Bubble

Let me give you a little background on why the tech bubble of 2000 – 2001 had such an effect on me. I graduated University in 1994 with a degree in accounting. I was lucky enough to get a job with a big 6 firm out of university. After 3 years there I moved to the private sector. My big break came in 2000 when I was able to successfully apply and get a job as the controller of a small but growing hedge fund. The fund had only $75 million under management at the time but was up 36% for the year. I was excited. The market was booming and this could be my chance to make some real dough.

Then came day one on the job.

As was the case with many hedge funds at the time, our’s was heavily invested in tech stocks as the frenzy was on. The day I walked into the office and took a seat at my desk, the bubble started to leak, or burst if you would say. We lost 2 million dollars that day and the rest is history. To say the least, that was sobering. We continued to lose money the rest of the year and eeked out a small profit.

Is a Blockchain Bubble Inevitable?

With all the new ICOs coming in and millions flowing to these unproven companies, is it inevitable that a bubble is approaching? It is sure that, as with all other companies, many of these will fail. The only advice I can give is to be cautious and diversify your portfolio, not putting too many eggs in the blockchain, ICO basket.