The Rhyming Lessons of the Internet Bubble and the Crypto Assets Craze

Written by: thiigth

Mark Twain once said, "History doesn't repeat itself, but it often rhymes." The Internet bubble (1995-2002) and the recent cryptocurrency craze (2017-2025) seem like two rhyming poems—after a wild celebration, they fall into a trough, and ultimately welcome rebirth. This article will compare the journeys of Ethereum (ETH) and Amazon (AMZN), taking you through these two financial roller coasters and summarizing the key lessons we can learn from them.

1. The Internet Bubble Era: Frenzy, Collapse, and Amazon's Comeback Under High Interest Rates

1.1 Carnival Party (1995-2000): Irrational Prosperity Under High Interest Rates

The internet industry at the end of the 1990s was like a rock star just starting out, with everyone believing it could change the world. Venture capitalists were throwing money at various new '.com' darlings, from Pets.com to Webvan, with entrepreneurs chanting "let's seize the market first and talk later."

The Nasdaq index soared by 86% in 1999, having been below 1,000 points in 1995, and surpassed 5,000 points by March 2000. Taking Amazon as an example, it went public in 1997 (IPO price of $18), and after several stock splits, its share price peaked at the end of 1999 (around $113) and reached a market capitalization of over $20 billion (in the dollar value at that time).

Despite the Federal Reserve maintaining the benchmark interest rate in the range of 5.5% to 6% from the end of 1994 to 1995, investors continued to act independently. Why did the internet bubble persist in such a high-interest-rate environment? The reason lies in the illusion of the "new economy." Investors firmly believed that the internet would eventually reshape the economy, thus ignoring the high cost of borrowing. At the same time, the 1997 U.S. "Taxpayer Relief Act" lowered capital gains taxes, igniting a wave of venture capital that poured cash into the technology sector. As a result, NASDAQ soared, and financing channels proliferated.

1.2 The Moment of Collapse (2000-2002): Interest Rate Hikes Burst the Bubble

By March 2000, the party came to an abrupt end. To curb inflation, the Federal Reserve began raising interest rates continuously starting in 1999, pushing the federal funds rate up to 6.5% by May 2000. The high cost of borrowing acted as a stranglehold, instantly choking the lifeblood of those unprofitable '.com' companies, leading to rapid cash depletion and the collapse of many cash-burning model enterprises (such as the online supermarket Webvan). External shocks followed closely, with Japan entering a recession in March 2000, and then the '9/11' terrorist attacks in September 2001 causing a significant drop in the New York stock market (with the NYSE falling over 14% on the first day it reopened). The Nasdaq index fell from a peak of 5048 points to 1139 points in October 2002, a decline of 76.81%, evaporating about 5 trillion dollars in market value.

At that time, Amazon was also unable to escape misfortune: its stock price fell from its peak to just $5.51 in October 2001 (a cumulative drop of 95%), its market value shrank to $2.5 billion, its debt approached $2.1 billion, and public opinion even asserted that "Amazon was going to fail."

1.3 Value Rebirth (2003 and Beyond): Low Interest Rates Propel Comeback

After the low period in 2003, Amazon finally迎来了 a turning point: the company achieved a net profit of $35 million and revenue reached $5.27 billion (turning profitable for the first time).

In 2005, Amazon launched its Prime membership (a two-day delivery service for an annual fee of $79), and in 2006, it introduced cloud services AWS, transforming from a pure book retailer into a "retail + cloud computing" giant. Since then, Amazon has continuously expanded with these innovative businesses, and by July 2025, its market value had reached approximately $2.34 trillion (equivalent to an 8858% increase compared to its market value in 2003).

The secret to success lies in its solid business fundamentals: maintaining healthy cash flow through sales of physical goods and a "pay later" cash cycle, while continuously innovating technology and expanding categories. The support of low interest rates has also played a crucial role— in 2003, the Federal Reserve lowered interest rates to below 1%, creating a relaxed environment for consumption and investment. It was during this window that Amazon massively built its logistics network and developed new businesses.

2. The Era of Cryptocurrency Bubbles: Low Interest Rates Take Off, Interest Rate Hikes Burst it

2.1 The Carnival Party (2017-2021): Frenzy under Zero Interest Rates

The crypto market can be regarded as the "digital remake" of the internet bubble. In 2017, Bitcoin skyrocketed from a price of around 1,000 at the beginning of the year to 20,000 by the end; ICOs (Initial Coin Offerings) became a global trend. Following that, from 2020 to 2021, concepts like NFTs, DeFi, and meme coins swept the market. Bitcoin reached an all-time high of nearly 69,000 in November 2021, while Ethereum rose to about 4,800, and the total market value of the crypto market once exceeded 3 trillion.

What drives this frenzy is the Federal Reserve's ultra-low interest rates and quantitative easing policies: from 2020 to 2021, the federal funds rate remained at 0%-0.25%, and the size of the Federal Reserve's balance sheet approached $9 trillion. Cheap capital led both retail and institutional investors to flock to crypto assets, causing a sharp increase in trading volumes on exchanges and activities on DeFi platforms. It can be said that the zero-interest-rate era provided "ammunition" for crypto assets, making this bubble more inflated than the internet bubble of the 1990s.

Unlike internet companies, the crypto market heavily relies on leverage and retail-driven activity. Speculative narratives and a large influx of "retail investors" have become the main characters.

2.2 The Moment of Collapse (2022): Interest Rate Hike Breaks the Spell

The situation took a sharp turn in 2022. To curb soaring inflation, the Federal Reserve began raising interest rates consecutively from March 2022, having raised them a total of 11 times by July 2023, with the target range for the federal funds rate climbing from 0%-0.25% to 5%-5.25% (the fastest pace of rate hikes in half a century).

The cost of borrowing has surged, making it difficult for the highly leveraged crypto market to sustain itself. The price of Bitcoin plummeted from its peak to around $16,000 (a drop of about 76%), while Ethereum fell from about $4,800 to around $900 (an 80% drop), and the crypto market cap evaporated by nearly $2 trillion at one point. Meanwhile, projects backed by stablecoin narratives and high leverage have collapsed one after another: the collapse of the TerraUST stablecoin and Luna caused losses of about $42 billion, the lending platform Celsius faced losses exceeding $1.2 billion, and the hedge fund 3AC went bankrupt and liquidated... The entire market seems to have experienced an "avalanche."

This crash has triggered a serious trust crisis. More and more investors are skeptical about digital assets, with reports indicating that nearly half of Americans say they "will never buy digital currencies again." Cryptocurrency participants are rushing to the sidelines to avoid risk, and the market sentiment is as cold as during the internet winter of 2002.

2.3 Recovery and Rebirth (2023-2025): Interest Rate Cuts and Policy Support

Ethereum has survived thanks to its immense ecological advantages: as of 2022, there are thousands of active DApps and developer teams on Ethereum, and its community consensus is relatively stable. In addition, Ethereum completed the highly anticipated "Merge" upgrade in September of the same year, transitioning from proof of work to proof of stake consensus, resulting in a drastic reduction in energy consumption by approximately 99.95%. More importantly, Ethereum is vigorously developing Layer-2 scaling solutions (such as Arbitrum, Optimism, etc.) to enhance transaction throughput and reduce fees.

After entering 2023, the crypto market began to attempt a recovery. The price of Ethereum had rebounded to around $2565 by July 2025, the total locked value in DeFi returned to hundreds of billions of dollars, and the NFT market gradually warmed up. Layer-2 projects like Arbitrum saw their TVL increase to billions of dollars, significantly enhancing the usability and user experience of Ethereum (these developments are similar to how Amazon's launch of AWS upgraded its business model).

On the other hand, changes in regulation and policy have also injected confidence into the market: In July 2024, the U.S. Securities and Exchange Commission finally approved multiple Ethereum spot ETFs, similar to the Federal Reserve's "firefighting" during the low-interest era of 2003, introducing institutional capital and legitimate compliance channels for digital assets.

Changes in monetary policy are also crucial. The Federal Reserve is expected to cut interest rates for the first time in the second half of 2024, lowering the rate from 5.25% to 4.75%-5% (somewhat similar to the low interest rate environment in 2003), with further rate cuts anticipated in 2025. These changes provide more room for imagination for risk assets.

Overall, Ethereum's recovery is based on the following key factors: the DApp ecosystem (thousands of applications and active users), technological innovations (Layer-2 and the merge upgrade), and favorable regulations (ETF listings), which is analogous to how Amazon relied on Prime, AWS, and a low-interest environment to support its growth after the internet bubble. From 2023 to 2025, although Ethereum's price remains far below its historical peak, it has already shown resilience and upward potential — as predicted by CoinGape and others, Ethereum is expected to truly explode by 2030, potentially reaching new highs similar to Amazon's that year (current market expectations suggest significant uncertainty regarding Ethereum's performance in 2025).

3. Federal Reserve Interest Rates: High Starting Point vs Low Starting Point Rhyme

The Federal Reserve's interest rate policy is like the "DJ" at these two parties, determining the rhythm of the celebration or calm.

Internet Bubble (1995–2002): The starting point was high (federal funds rate around 5.5%-6.5%), and the economic growth in the 1990s was relatively fast. To prevent inflation, the Federal Reserve adopted a high-interest rate strategy. However, the market was still infected by the enthusiasm for the "new economy" and tax reform, leading to rampant speculation. It wasn't until 2000, when the Federal Reserve raised rates 6 consecutive times to 6.5%, that the bubble was burst. After 2001, rates were quickly cut 11 times to below 1.75% (maintaining around 1% in 2003), resulting in a significant loosening of market funds, which aided the recovery of technology companies like Amazon.

Cryptocurrency Bubble (2017–2025): Starting from a low point (interest rates were nearly 0% after the pandemic in 2020-21), the Federal Reserve's massive quantitative easing resulted in a flood of risk capital into the market, causing the bubble to inflate even more rapidly (the Fed's asset scale surged to nearly $9 trillion). Beginning in 2022, the Fed's 11 interest rate hikes drove rates up to 5-5.25%, and the crypto market, which had taken off from 0%, was quickly "doused with cold water" by reality, leading to a sharp collapse. Now, from 2024-25, the Fed has begun to gradually lower interest rates (down to 4.75%-5% in 2024), which is positive for crypto assets, but future risks still exist.

The different starting points and rates of change of interest rates have determined the fate of two bubbles: the internet bubble of the 1990s gradually faded under high interest rates, while low interest rates aided its recovery; the cryptocurrency bubble soared wildly under zero interest rates, only for rate hikes to aggressively pull the market back to reality like a roller coaster. In summary: high interest rates crush speculation, while low interest rates allow bubbles to expand. This historically rhymed law has been vividly reflected in both waves.

4. Amazon and Ethereum: The Rhyming Comeback Road

Amazon and Ethereum, these two "protagonists of the story," have undergone remarkably similar journeys:

Carnival Period: Amazon experienced crazy expansion from 1997 to 2000, with a market value exceeding 20 billion dollars at one point; Ethereum saw an explosion of countless ICO and DeFi projects from 2017 to 2021, with its market value approaching 500 billion dollars at one point (the global crypto market peak was 3 trillion, with Ethereum holding a considerable share).

Crash period: From 2000 to 2002, the internet bubble burst, and the Nasdaq plummeted by over 76%, with Amazon's stock price dropping by 95%, seemingly on the verge of collapse. However, Amazon survived by selling physical goods and maintaining a strong cash flow (negative cash cycle), and after timely debt restructuring, it slowly recovered. Similarly, in 2022, cryptocurrencies plummeted by over 80%, with Bitcoin falling to $16,000. Ethereum also saw a significant decline, but thanks to its robust DApp ecosystem and community support, along with significantly reduced energy consumption after switching to PoS, it successfully weathered the winter.

Rebirth period: Amazon first turned a profit in 2003 and used this to expand, launched Prime in 2005, and introduced AWS in 2006—upgrading from an online bookstore to a comprehensive retail and cloud computing giant, with a market value reaching $2.34 trillion by 2025. Ethereum began to recover in price starting in 2023, and in 2024, it welcomed favorable developments such as the listing of spot ETFs, with its ecosystem continuing to expand; although it is still in deep consolidation today, the market expects its real takeoff may happen in the coming years.

Common lesson: Whether it is a technology giant or a blockchain platform, long-term value comes from solid fundamentals, technological innovation, and user base, rather than temporary speculative frenzy; and the interest rate environment sets the overall pace: the high interest rate phase eliminates the weak, while the low interest rate phase provides development opportunities for the strong.

5. What can we learn?

History may not repeat itself, but the rhyming lessons are still worth learning. The following points of experience can help us navigate the cryptocurrency market in 2025 with fewer detours and invest steadily:

Fundamentals are king: Amazon survived the internet winter because it maintained stable cash flow through physical sales and "pay after delivery"; Ethereum endured the cryptocurrency winter thanks to the value created by thousands of DApps and users on its network. When investing in digital currencies, priority should be given to projects with real applications and community support. For example, Ethereum (ETH) suffered less during the past turmoil due to its rich ecosystem; similarly, high-performance public chains like Solana (SOL) have also attracted attention for their user base and unique features. Avoid chasing "story coins" that lack real-world use cases, just like Pets.com, which thrived in 2000 but ended up as an empty shell.

Technological innovation is key: Amazon's AWS cloud services and Prime membership are crucial for upgrading its business model; Ethereum's Layer-2 expansions and other protocol upgrades (such as the recent Pectra upgrade) are also key to its revival. Investors should pay attention to which crypto projects have a technological edge: for example, Layer-2 solutions (like Arbitrum, ZK-Rollup, etc.) significantly enhance Ethereum's network throughput. In the future, focus can be placed on frontier projects in areas like on-chain AI and DePIN (decentralized physical infrastructure), allocating a small portion of the portfolio to emerging projects with strong technological potential to avoid missing the next wave of innovation dividends.

User base is a moat: Amazon has hundreds of millions of Prime members, which provides continuous consumer support even during crises; Ethereum has tens of millions of active addresses and developers, giving it a very strong network effect. When choosing investment targets, priority should be given to projects that have community and user support. In contrast, tokens that rely on "concept hype" and lack actual users often cannot withstand scrutiny. Just as Amazon shut down many product lines after 2000, leaving only the core business that truly adds value to consumers; when we invest in crypto, we should also consider whether the project truly solves a problem or has loyal users.

Interest rates determine the rhythm: Although the high interest rate era in the United States at the end of the last century suppressed bubbles, the subsequent low interest rates nurtured a technological revival. Today's Federal Reserve policy is equally critical: the period before the burst of the internet bubble was characterized by a high interest rate (6.5%), which accelerated the bubble's collapse; while the low interest rates around 1% in 2003-2004 provided breathing room and development opportunities for tech companies like Amazon. In contrast, the crypto bubble took off from a 0% interest rate in 2020, and the rapid interest rate hikes to over 5% in 2022 severely impacted the market. If the Federal Reserve continues to lower interest rates in the future, it will be a positive signal for risk assets. However, one must also be wary of macro risks (such as inflation pressures from trade frictions) and avoid blindly chasing rallies. A prudent strategy is dollar-cost averaging (DCA), maintaining patience, and avoiding panic selling during sharp declines.

Patience is key: From the internet bubble in 2000 to Amazon's first profit in 2003, it took 3 years; the real takeoff only started to accelerate after AWS was launched in 2006. Ethereum's situation is similar: after the collapse in 2022, prices quickly fell, and although they have rebounded by 2025, they are still far from reaching their peak. The market needs time to restore confidence, refine technology, and build the ecosystem. According to current trends, some analysts believe that Ethereum may not fully explode until 2028-2030 (similar to Amazon's experience from 1997 to 2006). Investors should be patient and gradually accumulate quality assets at low levels, rather than rushing for short-term profits.

6. Summary: The history of rhymes and future opportunities

The internet bubble and the cryptocurrency craze are like two rhyming poems: the initial frenzy rises in different interest rate environments, while interest rate hikes puncture the bubble at critical moments, and then low interest rates or policy support allow the survivors to be reborn.

Amazon has grown from a market value of over 100 billion in 2003 to today's several trillion, relying on solid fundamentals, technological innovation, and a favorable low interest rate environment; Ethereum has also risen from the bottom in 2022, building a foundation for recovery through a rich ecosystem, upgraded technology, and favorable regulations. The cryptocurrency market in 2025 resembles the internet market in 2003, with both opportunities and risks. As long as we remember the rhyming patterns of history: focus on fundamentals, embrace innovation, stick to users, diversify moderately, and hold patiently, we can steadily advance in the future waves.

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