What Is The Hype About The Bitcoin Bubble?
The Bitcoin is seen to be a bubble ready to burst any time now. Why is it so?
How Is The Bitcoin Bubble Doing In The Market?
In the Bitcoin bubble, the price has taken off again thereby forcing some to defend the value of the currency as utterly un-bubblish becoming a humorous exercise. It is done talking about the trillion-dollar coin as the finance nerd community is back on the Bitcoin bus. Trading at record price points Bitcoin currently clocks in at around $ 264 per coin. Putting that price point in perspective the Bitcoin spiked to around $ 237 falling to around $ 69 and back north of the $ 200 mark rapidly approaching the $ 300 ceiling.
Even though the people keep saying it isn’t a bubble, of course, this is a bubble as it’s a far too rapid increase in the price of a financial instrument that is unmoored from any inherent value being bid up by aggressive individual speculation if not what else is that? Another point worth keeping in mind is that it appears Bitcoin currently sees the value break ranks with transaction volume, whereas it is not what is seen in the past when the two were in loose unison.
Then What Is Going On In The Crypto World?
Even though it is not sure, the shuttering of Silk Road has already led to a meaningful decline in Bitcoin transactions with the speculative spirit driving the price of currency higher. In the case of the current boom, it is even more bubblish than before as the price rose before and then cratered mostly tied to rising and falling volume.
With value-based not on any sort of government backing or the like, Bitcoin can provide short term utility to all holders if it has used as the use is in decline its value should follow. It is simply odd to see the value rise as its use declines.
There was something interesting happening as, after a few months of relative stability, the Bitcoin prices began rising sharply again and the Bitcoin prices doubled from $ 125 to $ 350 which was just shy of the all-time high of $ 266. Posing a problem for those who called the high prices a bubble, people described a market move as a bubble generally referring to more than a rapid price increase followed by a decline which is just a garden variety volatility, which is rather the term bubble referring to an appreciation that is driven by hype rather than a sober consideration of market fundamental.
Has The Bubble Discouraged Investors?
It has turned to be a fact that bubbles pop as they tend to stay popped and the market comes to its senses realizing that the earlier higher price was irrational. In case of a price returning to its earlier highs a few months later, it suggests that the original appreciation might not have been so irrational after all.
This comes especially true in the case the price increases of the last few weeks it hasn’t been driven by the kind of media hype contributed to the price surge. Much of the media coverage of Bitcoin has been to the contrary relatively negative including coverage of a federal raid on the Silk Road drug market as a study claims that the currency has a serious architectural flaw.
This doesn’t come as a news environment you’d expect to generate rapid price increases as the prices are rising anyway driven by increasing investment in the cryptocurrency by venture capitalists as well as growing demand for the currency in China. While this certainly isn’t the first time the Bitcoin has had a bubble that turned out not to be so frothy, Bitcoin prices rocketed from about $ 0.30 to what has then seemed like an astronomical price of $ 32 before falling back to a low of about $ 2. Whereas in retrospect it has seemed clear that the bulls were right bitcoins were undervalued even at the $ 32 peak taking a couple of years for the rest of the market to recognize the fact.
Concluding Words On Bitcoin Bubble
It can’t be sure that the bears would look equally foolish as the market may crash again right after a rising price that ought to cause people who cried bubble back to have second thoughts. This exactly leads investors to have a quick retrospect of investing Bitcoin where it all started to be a bubble. The bubble may burst but it is not without attracting serious investment that makes the Bitcoin boom grow leading the way for other currencies.