For anyone with access to the internet, a newspaper, cable, satellite or anything else connected to the outside world, there's no hiding from this negative sentiment surrounding cryptocurrencies recent rise to dominance. The term "Bitcoin Bubble" has been regurgitated by every 'so-called' credible news media source known to man. It's everywhere you look or listen, you can't get away!!
"Debt stinks of Bubbles" - What does that even mean?
Top economist says Bitcoin bubble fuelled by 'Corbynistas' who will grow 'bored'. -TOP ECONOMISTS says who? "Corbynistas"..... LOL where do I start with this one. This word is rarely ever used in a kind way. Basically what they are saying is that everyone investing in cryptocurrency is a simpleton.
"History's biggest bubble" - I'm glad to see Turkey is now an authority on Bubbles!
"Be prepared to lose money" - Yes everyone that got into cryptocurrency is losing money! Great Call Ken.
"We don't even know how to value Bitcoin" - Let me help you out. Go to worldcoinindex.com and look at what Bitcoin is currently trading at. That will show you what the last bazillion people say it's worth and are willing to pay.
"Four ways a Bitcoin Bubble plays out"- I'm sorry but correct me if I'm wrong but aren't there only two ways a bubble can play out? It either 1.) IS A BUBBLE or 2.) ISN'T A BUBBLE.
So the question remains, is Bitcoin and really all cryptocurrency in a bubble?
I say NO absolutely not and these are several reasons why:
Reason #1. Most economic bubbles occur when they are inflated with artificial air. i.e. the tech bubble, the housing market bubble. These bubbles came to be, not because investors didn't know what they were doing or were too greedy, these types of attributes exist in all markets. It came to be because investors were using funds that were completely leveraged or funds they didn't have. Using gains to leverage more stock or mortgages, houses, etc.
How is cyrpto different? -Bitcoin, as well as most crypto millionaires, were made out of very little investment. Very few people hodling cryptocurrency are leveraged to the nines (try going to a bank and saying I want to buy a $10 million dollar house, I make $60,000 a year but I have $30 million in Bitcoin). For most of them, if Bitcoin were to go to zero tomorrow, they would still have the ability to live there lives as once before. Of course, they wouldn't be happy but life would go on.
Reason #2. In order for a bubble to burst it has to lose its ability to grow. i.e. the tech bubble. At the time the tech bubble burst it was reported that 98.5% of all investable monies was fully infused into the market. That means that as soon as a selloff occurred there was no new money to prop the market back up.
How is cyrpto different? - Even though Cryptomania has hit the masses less than 2% of the entire world's population is invested into cryptocurrency. Each day millions of potential investors find out about cryptocurrency and want to get involved. Trillions of trillions of dollars await to get involved from both large and small investors alike. Crypto's ability to grow for many many years is both realistic and reasonable.
Reason #3. Economic bubbles pop so abruptly because once the selling starts investors accelerate it like rats off of a sinking ship. The selling continues until the majority is left with nothing.
How is cyrpto different? - In cryptoland panic doesn't set in the same way. Why is this? One reason is that crypto investors are used to major swings with large drops, in fact, they embrace it. Remember most crypto millionaires don't have a ton of their investments leveraged so they can wait out a dip in the price. Secondly, it's not quite so easy to liquidate cryptocurrency as is say a stock or bond. By the time you got all of your money out, millions of people that have been waiting on the sidelines will prop the market right back up again. Many won't sell for a very long time purely because of FOMO.
So these are some of my opinions but I would love to hear yours. Is Bitcoin in a huge bubble? Yes or know and let us know why you think so.
It is a bubble because people rush into it too fast, with too big expectations - which can't be met.
Thus it will pop...
But like in Nasdaq, what drops soon recovers.
I think crypto-market here to stay, and build and pop more and more bubbles.
Good post. I wrote something pretty similar as well. EVERYONE and their mother equates blockchain communities with corporations. No, we don't pay for servers, tech, transportation, employees, etc. We don't have to make money, and we don't have to compete with each other. Blockchain tech is so complicated and new that it tricks people into thinking that it's something that it isn't.
Think of it this way. As long as a few major coins hold true value. For illustration let's say Bitcoin, Ethereum and Dash. Then the value of the rest of cryptocurrency only needs to rely on demand or use. Not all coins have to be a store of value to be worth something. In cryptoland value is based on usage. Like you have stated, blockchain and mainstream corporations don't equate.
Yeah it's just funny because Bitcoin is the worst coin. People are giving it value because it was first... like you should do with a corporation that corners the market. Ive got news... the market can't be cornered... aka... what market?
IMO, it is a bubble. However, it is very hard to say when the bubble will burst though. Remember in 1998, we had the famous "exuberance" talk from Alan Greenspan regarding tech stocks? The market went up another 2 years before it crashed.
I think this is a great comment on the bubble theory. Its a good watch for sure.
My two cents, the bitcoin bubble may come quicker than the Internet. The internet has evolved into many different forms, like the social network and e-commercial, which help it get over the bubble era. However, bitcoin only a currency, it couldn't provide more than a currency can do. That's limit its future.
Just a currency? The thing that literally runs the entire planet? An unhackable, transparent, open source, worldwide, incorruptible currency... what is your perceived value cap here?
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STOPOf course, what is happening now on the market is called an economic bubble. More and more friends ask me, for advice about how to buy bitcoin, and you know? - They buy it. Btw they are not familiar with cryptocurrency and not confident Internet users.
The rise in prices provokes even greater demand, which in turn provokes an even greater price increase - this is called a bubble! And it will burst, look at the capitalization of most of altcoins, they do not have any fundamental indicators, why the capitalization of IOTA 14 billion? This is not a bubble?
The bubble will burst when more than 90% of investors realize that the coins they hold will not fulfill their promises during ICO, and this moment is already approaching.
Find out more in detail why this is bubble from my article: https://steemit.com/blockchain/@unum/if-there-is-a-bubble-on-the-current-cryptocurrency-market-then-when-will-it-burst