January 28, 2022

Crypto Craze: Mania, Game-Changer or Both?

Alpine Macro are on the record as “crypto sceptics”. The crypto craze has elements of a classic Dutch Tulip mania, or the late 19th century Gold Rush, when everyone went to the Klondike to get rich but they did not know what they were doing. However, blockchain technology also could lead to a huge wave of innovations accompanying the bubble. Speculation can be in tulips, which completely crash and burn and is a pure Ponzi scheme, with no real value proposition. But it can also be in canals, railroads, cars or the Internet. The latter type of mania also crashes and burns, as occurred with tech after the late 1990s bubble. But the bullish fundamental story plays out in installments and eventually changes the world. Investors need to understand the value proposition or they can lose plenty of money, as they did with the NASDAQ after the tech bubble burst, even if the underlying infrastructure is a game-changer. Stay tuned.