Source: ARK Disrupt Issue 131: July 2, 2018. By @wintonARK

Almost everyone in the US has encountered an article or two, or two thousand, describing bitcoin, cryptocurrencies or blockchain technology over the past 6-9 months. Indeed, the number focused on bitcoin/cryptocurrencies spiked with bitcoin’s price during the fourth quarter of 2017, as shown below. Now that the price and press coverage have dropped sharply, we believe many observers are asking, “Was that it?”

ARK Disrupt Issue 131 Graph 1

A comparison of this press coverage to that during the last bubble would suggest that cryptocurrencies were in a bubble, and that it has burst. As shown below, the number of US articles focused on cryptocurrencies peaked at roughly the same percent of all US articles as those during the dot com mania.  In other words, most business news readers probably learned about the investment “opportunity” in bitcoin last year.

ARK Disrupt Issue 131 Graph 2

That conclusion falls short, however, as it does not account for differences in the maturity not only of the capital markets supporting dot com stocks and cryptocurrencies but also of the internet and blockchain technologies. The dot com bubble inflated to 6% of global GDP whereas, at its peak, the value of cryptoassets hit only 0.8%. ARK believes that among the primary reasons capital did not follow prices and media attention in the cryptoasset space was the lack of capital market infrastructure, particularly regulatory and legal, which prevented institutional and other broader market participation. During the dot com boom, equity markets were ready and willing to participate, in hindsight too much and too soon. In contrast, the lags in cryptoasset infrastructure development could accrue to the benefit of this new asset class in the long term.

The convergence between price and the utility value of blockchain technologies also helps to explain differences in media mentions between the internet bubble and the cryptoasset ascent.  Because “dot com” articles encompassed both the equities and the technology, many focused on the technology and explained the internet services and products themselves. In contrast, because the prices of cryptoassets incorporate the future utility value of an underlying technology that is evolving rapidly, articles tend to focus on price movements on crypto exchanges.

Media mentions including the term “internet” peaked just after the Nasdaq in early 2000, dwarfing mentions of cryptocurrencies seen late last year which, in turn, had not been seen in the internet space since 1994. In that year, interestingly, the first web browser had been in development for just a few years with little clarity on how the technology would proliferate, nor how pervasive it would become…perhaps an apt description of where cryptoassets are on the timeline of development today.

ARK Disrupt Issue 131 Graph 3

View original article and other research here.

ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.

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Fred Pye

Frederick T. Pye


Frederick T. Pye is the Chairman, Chief Executive Officer and Director of 3iQ Corp. He is also the Chairman and Director of 3iQ Digital Holdings Inc. Mr. Pye is recognized for creating and promoting creative and unique investment products for the investment industry.

Mr. Pye has managed private client portfolios with Landry Investment Management and various other investment dealers. Prior to this Mr. Pye was Founder, President & Chief Executive Officer of Argentum Management and Research Corporation, a company dedicated to managing and distributing quantitative investment portfolios including the first long-short mutual fund in Canada.

He was also Senior Vice-President and National Sales Manager of Fidelity Investments Canada and an integral part of the team that saw assets rise from $80 million to over $7.5 billion in assets under management during his tenure. He also held various positions with Guardian Trust Company, which listed the first Gold, Silver and Platinum Certificates on the Montreal Exchange.

Mr. Pye obtained a Masters in Business Administration from Concordia University.