Has Crypto Failed?

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The past few months have been tough. For those working in finance, every morning has felt like a battle. One of the largest cryptocurrency exchanges has collapsed, token prices have dropped 90% from their all-time highs, and the average daily active user count on dApps rarely exceeds 100. It's natural to wonder:

👉 Discover why this downturn might be the best thing to ever happen to crypto.

Has crypto failed?

Over the past weeks, I’ve been trying to understand where cryptocurrency stands as an asset class, how it fits into historical technology cycles, and what comes next. A close friend suggested I read Carlota Perez’s Technological Revolutions and Financial Capital—a book that reframed my thinking. This article distills six weeks of reflection, research, and observation.

Understanding the Nature of Bubbles

A bubble isn't a flaw—it's a feature of technological evolution. To understand it, we must examine what drives asset pricing.

For commodities like bread or coffee, prices are tied to utility and supply-demand dynamics. Even during spikes, alternatives exist. But when it comes to blockchain-based monkey JPEGs or governance tokens, predictability vanishes. Markets become driven not by fundamentals, but by imagination and greed.

Every historical bubble shares common traits:

1. A New Technology or Asset Class

From 18th-century stock manias to 19th-century railway booms, each wave begins with innovation. The Mississippi Company promised riches from South American mines; bicycles in the 1890s sparked investment frenzies. Early expectations often outpace reality by decades.

Today’s internet adoption—around 50% globally as of 2020—shows how niche tools can grow into mass-market infrastructure over time.

2. Lack of Data

Without historical benchmarks, risk feels rational. Investors won’t pay 100x P/E for energy stocks because data warns against it. But for new technologies? Anything seems possible.

Take bicycles: UK investors assumed massive profits from limited production. Reality hit when U.S. imports flooded the market, collapsing local manufacturers. Similarly, while analytics platforms like Nansen and TokenTerminal now offer transparency, data literacy lags behind.

3. Inflated Expectations

New tools ignite imagination. Telephones let you shout across continents; refrigeration changed food preservation. Today’s narratives are amplified by influencers and algorithms designed to maximize attention—not accuracy.

Just as ChatGPT is both revolutionary and possibly overhyped, so too was crypto during its peak.

4. Emergence of New Networks

Every major network shift sparks speculation. The telegraph enabled remote trading, fueling the 1929 crash. Programmed selling via computers worsened Black Monday in 1987.

The internet accelerates this further. GameStop wasn’t just a U.S. story—it went global. Beeple’s $69 million NFT sale didn’t stay in art circles; it ignited a worldwide digital art craze.

Social media magnifies FOMO (fear of missing out), combining low attention spans with high narrative velocity and growing inequality—perfect conditions for speculative mania.

The Pandemic’s Psychological Impact

We’re not just dealing with technology—we’re shaped by context.

Young people today face extreme wealth inequality. Baby boomers hold five times the net worth of millennials on average. Student debt deepens the gap. Unlike past generations who compared themselves to neighbors, today’s youth measure against celebrity billionaires like the Kardashians.

Historically, risk-taking surges during crises. Isaac Newton lost heavily in the South Sea Bubble—despite his genius—because average life expectancy was just 35. Dying young made high-risk bets rational.

Similarly, post-pandemic markets reflect a society closer to mortality, more willing to gamble. Locked indoors, people sought entertainment and meaning. Crypto offered community, distraction, and the illusion of wealth creation.

When investing becomes entertainment, portfolios turn into punchlines.

Institutional Mimicry and Capital Flood

Retail isn’t solely responsible for the boom. Institutional capital played a huge role.

In the U.S., startups now take seven years on average to go public—down from three during the dot-com bubble. Mega-funds like SoftBank and Tiger Global accelerated this trend, revaluing companies rapidly based on traction alone.

With $1 billion under management, deploying $10 million is just 1%. When too much capital chases too few startups, valuations inflate—OpenSea at $13 billion, MoonPay at $3.4 billion.

Public markets once served as reality checks. But when private valuations match or exceed public ones (like Coinbase vs. Paytm), the benchmark breaks down.

Then came the crash. IPOs slowed. VC deal flow dried up. Tiger Global went from $8B in 2019 to $70B in 2021—and now pulls back dramatically.

👉 See how smart money is quietly positioning for the next phase of crypto growth.

The Unique Madness of Web3

What made this cycle different?

Unlike earlier ICOs selling distant visions, DeFi offered immediate yield. “Play-to-earn” games and NFTs attracted retail like never before. Combine that with viral mechanics—staking, locking, minting—and you get billions in NFT volume overnight.

Institutions benefited too: invest in infrastructure (like Alchemy) or platforms where users trade assets. No need to pick random meme coins—just ride the wave safely.

Compare Facebook’s failed metaverse push with crypto-native virtual worlds where land sells for tens of thousands. Why the difference? One forces adoption; the other rewards participation instantly.

For the first time in history, we have tools to create bubbles in hours—not years.

Are We Living in a Dream?

A friend recently told me he’s confident he’ll always make money—no matter what happens in crypto. He’s a CXO at a major blockchain firm, benefiting from one of the largest monetary expansions ever.

But what if we’re all caught in a decades-long tech bubble? What if, at 40, we wake up realizing we spent 20 years on meaningless tech?

Life’s too short to build things nobody wants.

So let’s look at real traction—not hype.

Stablecoins: Real-World Utility

Stablecoin transaction volume surged to $1.6 trillion** last quarter—up from $90 billion in Q1 2020. That’s a 17x increase**.

While Visa processed $14 trillion in 2021 (about 10% of which matches stablecoin volume), the comparison isn’t fair—Visa has 40 years of network effects.

But stablecoins fill real gaps:

Digital economies are outpacing payment rails. Roblox users spent 4 billion hours in October alone—equivalent to human activity stretching back to prehistoric times.

Stablecoins offer speed and finality traditional banks can’t match—especially in emerging markets.

DeFi: Revenue Beyond Hype

Yes, token prices crashed—many down over 90%. But fees tell another story.

Top DeFi apps generate real revenue. Of the top 10 fee-generating dApps, 7 are DeFi-related. On TokenTerminal’s top 25 list, about 22 are DeFi.

Even after the crash:

This suggests real usage—not just speculation.

Uniswap dominates DAUs, but platforms like Aave and Compound show steady growth despite less frequent interaction (you don’t repay loans daily).

Compared to Coinbase’s ~600K U.S.-based DAUs, DeFi’s user base is significant—even if smaller in absolute terms.

NFTs: From Speculation to Utility

NFT trading fees dropped from $30M/day to $1M—but that ignores growth: up 500x since late 2020.

Volume decline is natural: non-speculators buy once and hold. Prices fell—but blue-chip NFTs dropped only 13% in ETH terms, outperforming the S&P 500 (-20%).

More importantly:

NFTs are being repackaged:

These aren’t JPEGs—they’re digital ownership tools enabling global resale markets, royalties, and future metaverse integration.

The Road Ahead: From Mania to Maturity

We’re exiting the “frenzy” phase and entering “synergy”—a term Carlota Perez uses to describe when technology matures and integrates into society.

Key signs:

Just as Dodd-Frank followed 2008, expect tighter rules post-FTX collapse. But regulation enables institutional adoption by reducing risk.

And consolidation is inevitable: strong players will acquire undervalued startups cheaply.

Frequently Asked Questions

Q: Did crypto fail if prices dropped 90%?
A: No. Price drops don’t equal failure. Internet stocks crashed in 2000—but led to trillion-dollar companies like Amazon and Google. Similarly, crypto’s infrastructure grew massively despite bear markets.

Q: Are stablecoins safe?
A: Reputable stablecoins like USDC and USDT are backed by reserves and regularly audited. While risks exist (e.g., depeg events), they’ve proven resilient under stress—used globally for fast, low-cost settlements.

Q: Is DeFi still relevant after hacks and crashes?
A: Absolutely. Over $4 billion in fees generated since inception proves demand exists beyond speculation. As UX improves and scaling solutions mature (L2s, bridges), mainstream adoption becomes feasible.

Q: Can NFTs recover from current lows?
A: Yes—but not as speculative assets. Their future lies in utility: ticketing, identity verification, digital collectibles embedded in social platforms like Reddit and Instagram.

Q: Will big tech kill crypto innovation?
A: Unlikely. Web2 giants may adopt blockchain features—but decentralized networks offer censorship resistance and user ownership that centralized platforms can’t replicate fairly.

Q: What should investors do now?
A: Focus on fundamentals: user growth, revenue generation, and real-world use cases. Avoid chasing hype cycles—build or invest in projects solving actual problems with sustainable models.

Has crypto failed? No—it’s evolving.

Like early flight or the internet, today’s crypto feels clunky and overhyped. But beneath the noise lies foundational progress: stablecoins enabling global payments, DeFi generating real revenue, NFTs transforming digital ownership.

👉 Learn how to spot the next wave of real innovation before it goes mainstream.

The dream isn’t dead—it’s just getting started.