Wells Fargo wrote in a global investment strategy note that cryptocurrencies are comparable to the dot-com frenzy. How true is that thesis?
The internet craze of the mid-1990s led to a crushing loss in many firms. Only the strong, like Amazon, survived. Google later thrived as Yahoo lost its way.
Wells said that crypto is still early in the investment revolution. The firm cited bitcoin as the oldest crypto, while Ethereum joined five years later.
With countless cryptocurrencies flooding the market and many platforms and exchanges, many will no longer exist at some point. But just like the dot-com bubble, the cryptocurrency market will mature. Established crypto, including Ethereum and bitcoin, will likely thrive.
Major platforms like Coinbase (COIN) will continue growing. However, companies that are not pure-play platforms or crypto wallets will struggle. For example, Robinhood (HOOD) will need to spend more to build its crypto features. It also has regulatory rules to adhere to, adding to costs.
Crypto Scams and Hacks
The wild west of cryptocurrency scams on social media sites is a symptom of the growing market. The prevalence of hackers that steal from platforms will continue. Only the strongest platforms will thrive as the competition shuts down.
