Crypto vs. Dot-Com: A Comparison of Market Crashes

Abstract.
The dot-com crash (2000-2002) resulted in a significant decline of technology stocks. A similar scenario was seen in the cryptocurrency market in 2022, as the value of digital assets experienced a sharp drop. Both market corrections share some similarities, such as the excitement surrounding new technologies and their potential impact on the global economy. However, the causes of these crashes are quite distinct. The dot-com crash was the result of multiple factors, including the overvaluation of tech stocks, lack of profitability among dot-com firms, and the general economic downturn. On the other hand, the cryptocurrency crash was mainly due to the rapid increase in crypto values, followed by a sudden drop, made worse by bankruptcies and allegations of mismanagement and fraud.The recovery process from both crashes was also different. After the dot-com crash, there was a lengthy period of consolidation and eventual rebound, while the crypto crash led to a shake-out in the market, leaving an uncertain future for the recovery of most cryptocurrencies. Despite the uncertain future of cryptocurrencies, they have already had a significant impact on the financial world. Most crypto projects will fade away, but established cryptocurrencies such as Bitcoin and Ethereum are expected to survive.