Why did crypto crash? Mark Cuban compares crypto ‘lull’ to the early internet

Mark Cuban, billionaire entrepreneur and owner of the NBA’s Dallas Mavericks, thinks that cryptocurrency is on the same downward trend that tech and internet companies hit in the early 2000s.

Bitcoin dipped below $20,000 several times in the Summer of 2022, its lowest levels since late 2020, and sales of non-fungible tokens, aka NFTsplummeted between January and March 2022.

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Cuban addressed the slump in a viral Twitter
TWTR,
-1.85%
thread in May, and crypto prices have continued to slump since then. “Crypto is going through the lull that the internet went through,” he wrote.

The comparison between cryptocurrency and the early days of the internet has been made by Cuban and others including entrepreneur Gary Vaynerchuk before. The dot-com bubble burst in 2000 after several internet-centric companies received high levels of investment speculation, only to eventually bottom-out.

See also: Mark Cuban on board with Biden plan to forgive $10,000 in student loans: ‘It has to be fixed’

Cuban sold his company Broadcast.com to Yahoo in 1999 for $5.7 billion, just before the dot-com bust. Broadcast.com has since been discontinued.

The billionaire Dallas Mavericks owner is heavily invested and interested in the crypto and NFT space. He claims to own several thousand dollars worth of bitcoin
BTCUSD,
-0.42%,
ethereum
ETHUSD,
-0.39%
and dogecoin
DOGEUSD,
-0.92%,
according to a CNBC report, and also says that 80% of his investments that aren’t on “Shark Tank” are crypto-related.

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But what’s next? While NFTs have exploded in popularity over the past few years, with creators like Beeple and NBA Top Shot selling NFTs for millions of dollars, recent NFT sales have plummeted as more creators flooded the marketplace. The average daily transaction volume on OpenSea, the largest NFT marketplace, was down more than 55% from January 2022 to March 2022according to crypto data tracking platform Dune Analytics.

“I think that early on, you saw lots of new entrants who were enthusiastic about this, but didn’t necessarily have a grasp of the fundamentals, and I think the cooling is a reflection of that,” Jordan Birnholtz, co-founder at NFT marketplace Neon told Distributed Ledger.

See: How a millionaire outbid a billionaire to buy the Golden State Warriors in 2010

Millionaire Vaynerchuk, who invested early in companies like Facebook
FB,
Twitter, Uber
UBER,
+2.27%,
Snap
SNAP,

and Venmo, told MarketWatch in July 2021 that he, like Cuban, sees NFTs and crypto following similar paths as the early internet companies in the late 1990s.

I view NFTs exactly the way I viewed the internet in 1999. Internet stocks and their valuations were through the roof, prematurely, and a lot of things collapsed. Meanwhile, eBay
EBAY,
+0.93%,
google goog,
+0.08%
and Amazon
AMZN,
+2.39%
were all there,” Vaynerchuk said.

See also: Here’s how much money you would’ve lost if you bought crypto during Matt Damon’s ‘Fortune Favors the Brave’ commercial

Cuban said somethings similar in a now-deleted tweet last January. “Watching the cryptos trade, it’s EXACTLY like the internet stock bubble. EXACTLY,” he wrote. “I think BTC, ETH, a few others will be analogous to those that were built during the dotcom era, survived the bubble bursting and thrived, like AMZN, EBay, and Priceline. Many won’t.”

Cuban’s latest crypto comments come as prices for many cryptocurrencies are plummeting. Prices for bitcoin and ether were hovering around roughly half their November peaks in June.

See also: Who is the richest person in the world? Jeff Bezos no longer owns the top spot.

On May 9, the same day as Cubans tweet, shares of crypto exchange Coinbase Global
COIN,
+2.08%
fell more than 13%, MicroStrategy
MSTR,
+0.39%
shares were down over 17% and Riot Blockchain Inc.
RIOT,
+2.54%
was down over 13%.

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