Bitcoin Bubble Popping, May Cause the Biggest Financial Crisis Yet
Watching what is happening in #Bitcoin is actually terrifying right now.
It is the groups of people that are creating groups to get other people to buy into it, with no concept of how bubbles work, how dangerous leaving money on unregulated exchanges is, or how trading fever carries the newbie away with plans to buy houses and yachts, all while waiting to catch the price top and yet owning nothing but dreams in the meantime.
Bitcoin is worth nothing, until you sell it.
You cant ever catch the top of a currency, and the moment it tops, no one is going to get their money back after that, when it plummets.
Just totally insane some of the webinars I have been seeing with people getting into credit cards en masse, together to buy Bitcoin and thinking they are achieving something great, trusting like suckers, while making out they are somehow clever for doing... nothing. Its the high you get from seeing the rise upwards. This is a bubble, absolutely.
Many people with no concept of what will happen when the price turns around. When it does, there will be no way to sell it because the exits will be flooded and the exchanges will crash. Unregulated exchanges, that wont really owe anyone much since it is all...
UNREGULATED! Anyone here even heard of Mt Gox?
The irony is, if you say any of this to anyone, they tell you not to be negative.
No sh*t !
I truly believe when this bubble pops, which it will, then it will start the biggest financial crisis in the world seen to date, because of the freedom anyone has to put everything into Bitcoin right now. A kid can do it without their parents even knowing.
The money borrowed on credit, and being put into Bitcoin currently moving up at around 4 Billion Dollars every 24 hours on Coinmarketcap and growing exponentially, insanely right now, is all going to disappear in the moment it all turns around. Then the Bitcoin price will be gone, but the debts will remain.
It is going to be a Bloodbath.
Could be tomorrow, or worse, could be a year from now when everyone is so soporific to the price rising ever upwards, that they have no idea it will stop at some point.
My advice now is get out of Bitcoin now before it pops. Stop waiting for the top. Ask a trader for advice they might help you avoid the rookie mistakes such as mentioned here.
A hell of a lot of people are going to be totally ruined by Bitcoin when it crashes. And the banks will probably encourage this debt making, since they of course will then win again, when it does.
While I agree with the sentiment of bubble-like, the "crisis" from cryptocurrency popping will be relatively muted. A total market cap of $200 billion max isn't a lot. Compare that to any other major asset which is valued in the trillions: that's 3 orders of magnitude in difference.
you should see some of the webinars occuring on this. groups of solo-preneurs totally deluding themselves and large numbers of followers based on the fact the coin is just going up at the moment. many people are buying in and not even owning the private keys themselves, just getting in on the bubble. It does appear to be now something like the Tulip bubble only as ZHedge pointed out exponentially far bigger than any bubble to date . will be interesting to see what happens. there will be some incredible stories at the other end of this road. not all good.
Exponentially faster, not exponentially bigger. The Chinese stock, listed in ZH, is approximately $3 Trillion. That alone is 1000 times larger than all cryptocurrencies. If there is a pop in crypto it will be like a large enterprise going pop. Albeit large enterprises tend to be owned by pension funds etc, arguably crypto is (almost) only owned by private investors and not in large funds. So naively, I expect the knock-on effects to be relatively muted.
lets hope so. see you next year. be interesting to see when the price turns, maybe it will just keep rising forever and everyone will make money out of it.
Although the recent rally may be met with a market correction, there are several factors that will support Bitcoin and help it recover in the event of a bubble burst.
Consider that the bottom falls out, and the price plummets, panic selling ensues, total pandemonium, right?
Then it follows that:
2a) Transaction confirmations are now at a premium, with increased Tx fees, which provide incentive to the remaining miners
2b) The next difficulty adjustment helps compensate for lost hashing power
The risk of a bubble is very real, but will be self correcting. A huge difficulty with Bitcoin is trying to determine a valuation, and while it may be overvalued today, there could be news tomorrow that changes that perception entirely. John McAfee just went on record forecasting Bitcoin at $500k in three years. For most people that sounds ridiculous, but what if he is right?
completely agree but there are few issues that make carnage in the next price collapse, a forgone conclusion.
I have been watching groups of solo-preneurs expanding very rapidly getting on the bitcoin bandwagon and encouraging others to buy into bitcoin with them. some even recommennd borrowing to get in on it. Right now the price is rocketing skywards.
This bascially means that the moment it turns there will be a whole bunch of people that get out ok with a good profit. but most of the rest will not. The price will fall to earth (only temporarily I agree and veterans will buy in at that point too) but when it falls probably ,many hundreds of thousands of people will have their credit card debts remain while their dreams of bitcoin riches disappear in a moment because they could not get out in time.
the key issue is UNREGULATED. no protection or insurance and no legal demand for STOPS to be in place this is worse than 1987 when traders could go crazy because it is so much more expensive and so much more accessible to the laymen/women.
the other key issue is ANYONE can get in and most of these people have ZERO training in Trading and the problems rookies face chasing the TOPS of rising currencies or stocks.
Best case scenario right now, is that a lot of people get out before it gets too much higher.
regardless a lot coming in before the final fall will be losers. depends how far it falls as the fall from this point of $8000 to $1000 will very likely wipe out exchanges far worse than Mt Gox did. No money is protected out there, never mind the scams and hackers.
worst case, now is sadly the most likely too, especially if this continues to rise like it is, that people buying in now, and not getting out until late, will not get out.
I predict a bloodbath. its too late to stop it, the only question is how many people will have their lives ruined when the price eventually crashes.
sure the rest of us will buy back in and the cycle will repeat but the sheer numbers of people moving into bitcoin each day right now is in the 100,000 per day something insane like that. most of whom have no idea what they are getting involved with.
I fully believe bitcoin price will reach 20,000 , 50,000 100,000 and could go to a million ,but think of the damage it will do if this keeps going on. If you listen to people out there coming in now they think it can ONLY go up, many people are putting big debts into buying bitcoin on this assumption. Bascially the higher it goes now, the harder and bigger the damage globally when it falls.
I truly believe the longer it takes, the bigger the global wipe out and knock on effect will be in other areas because of instant massive debt it will cause, and that will trigger a hell of a GFC.
sure, some will be alright because they are in it without any debt to do so, and in it early. so for them its free money, but its a zero sum game for the rest , the late comers, who will be giving the early investors millions in the process of going into debt they can never hope to get out of when it does drop.
That will kill a lot of people, that is actually the sad bit.