Bitcoin’s rise may bring back bubble calls -- but this chart puts it all in perspective
Bitcoin is staging a run. The last couple weeks saw it bounce from the lows and now tops $8,000. Everyone is wondering is this the beginning for a new bull run or just a jump off the low before resuming the downward move.
If this does signal a reversal, how long until we see calls that Bitcoin is in a bubble? There are many out there who like to slam Bitcoin claiming it is overvalued and "bubbling". It will not take much of a move for those people to start the call again.
The world of money is enormous. So, too, is the world of assets. Bitcoin and the entire cryptocurrency market is minute compared to the other asset classes. This is a vital point for people to remember as the calls for bubble start raining down from the rafters.
Here is a visualization that should put the different markets into perspective.
The gold market is long considered to be a minor investment vehicle which is use primarily as a hedge or by those who have a view of impending financial doom. These people tend to be anti-fiat believing that the only true "money" is that backed by gold. It is often a part of portfolios but rarely does it make up a major percentage of one's holdings.
Looking at the chart, we see this market is 7T, much larger than the 300B that the entire cryptocurrency market rings in at. The findings get exaggerated even more when looking at the total money supply, stocks, and real estate. Compared to these markets, cryptocurrency is the equivelant to a rounding error.
This chart shows that all calls for a cryptocurrency bubble will be pre-mature. There is a lot of room for growth before this asset class is anywhere close to a legitimate player. This means that the idea of it bubbling, especially so early in the development, is misguided.
The ebb and flow of markets are natural. Bubbles, however, are a different story. If one wants to watch for bubbles, the other asset classes could be more likely candidates. They had a much bigger run than Bitcoin and cryptocurrencies.
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Bitcoin is rising for now, that's all we need to know and hope it continues.
You use a lot of bot promotion bots to get the work of another author to trending therefor flag
...and on top of that the argument is silly. It´s like saying the dutch tulip crises wasn´t a bubble, because Goldman Sachs wasn´t in the market. You can´t just compare a set of assets and compare them to the rest of all money involved in all assets. That´s simply not relevant to the topic.
A bubble is a massive overvaluation of an asset in a given time interval. It´s more about the expected value of an asset and the willingness to take risks of the people on the market. Technically you can have a market cap of 1$ and still have a bubble.
What the graphic shows is how tiny the market cap is compared to other assets. It doesn´t tell us anything about bubbles or what not. In actual fact there are still mostly useless shitcoins out there. The more shitcoins the easier it is to reach a massively overvalued market. So, yes the talk about an upcoming bubble is reasonable.
The bubble is popped, long live the bubble!
the bubble has just started. with dirt for demand in btc could go up $10,000 to 1btc before September this year.
Or it could not. Surprise.
Enjoy the ride.
LOL.
I think the point to get out of these figures is that crypto is still relatively small compare to global money supply. Since Bitcoin is aiming at becoming global money and that money want to be used as THE unit of account it's fair compare them together.
refreshing to actually read a reasoned text about crypto these days
yeah absolutely right
Agreed, this is not original content and should not be sent to trending, I've added my flag to the list.
That is very true, the chart only shows you the cap of markets, nothing about the authenticity of the value, not about bubbles not about anything else. I always wonder how these people get their posts to be very valuable and it's sad to know it's just a matter of bot promotion.
Great post, it certainly does put things into perspective. Thanks mike
Bitcoin come back, price now $8260
Crypto market is dominated by Bitcoin. Look at the Bitcoin Dominance rate..
some people predicted $250k for bitcoin. In that case, Bitcoin still in a very good position
Great article buddy
infuture bitcoin or digital curency top
Bitcoin is already at the top
Peaks and valleys is the name of the game when investing in anything. Buy low and sell high is the smart play without a doubt. When everyone is running for the hills is when the smartest are heading towards whatever everyone else is dumping. Diversification is key so when the runners away are dumping one to buy another you have that other to sell them on the way up or the peak of that particular asset. Cash is KING for buying whatever it is they're dumping on the low or valley. It's all timing and a watchful eye. Those who sit on one thing or only have one type of egg in their basket suffer most IMO. BTC has been beaten up for a while now and so have most other coins as they all seem to fluctuate with BTC. I have no doubt it'll go back down and may even make lower lows but with big investors setting up ETF's and buying exchanges there's no doubt in my mind that we'll see massive new highs at some point. Hodl what you have. Sell if you need to. Accumulate what you can across the spectrum of assets with fiat YOU DON'T NEED and you will do well as you've hedged your basket................
The key point is whether the bubble bursts.
Bubble will always bursts. The question whether the crypto market is in Bubble?
The debt is the most important factor. Its scary to see how big that number is.
Very....but when you think about it, that huge number will one day play a factor in crypto growth.