Once upon a time, in the late 1990s, there was a period known as the dot-com bubble. Also known as the Internet bubble, was a period from 1995 to 2000 of large, rapid, and ultimately unsustainable increases in the valuation of stock market shares in Internet service and technology companies. These companies were commonly referred to as “dot-com” companies, including fledgling businesses or “start-ups” with little or no record of profitability or unrealistic business models.
The market was so empty, and during the bubble, the technology-dominated NASDAQ Composite index rose nearly sevenfold, from 743 to 5,048.🎢
This reflected the early enthusiasm of investors in dot-com enterprises and the willingness of venture capitalists to finance the initial public offerings (IPOs) of Internet start-ups.
Many investors became convinced that the U.S. economy had been fundamentally transformed and that several factors that had traditionally figured in the valuation of a company’s shares were not directly relevant to assessing the future performance of dot-com companies . This led to investor overconfidence, often referred to as “irrational exuberance”, which resulted in the shares of dot-com companies being priced far in excess of their actual value .
As do all financial bubbles, the dot-com bubble finally burst. In early 2000, after the U.S. Federal Reserve announced a modest increase in interest rates, investors in dot-com companies began a panicked sell-off of their holdings.
So, is Metaverse another dot-com bubble?
There are mixed opinions on whether the Metaverse is a bubble or not. A survey found that 78% of respondents who had already heard of it described it as a bubble. Morgan Stanley predicts that global spending on the technologies that underpin the metaverse is expected to rise from $12 billion in 2020 to $72.8 billion in 2024.
However, the metaverse does not exist yet, and even if it does, it is not fully formed.
Interest in the metaverse boomed after Facebook said it would change its name to Meta Platforms, but metaverse cryptocurrencies have fallen as the enthusiasm seems to be fading.
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