Is Bitcoin In A Bubble?
Yes. And... no.
What creates price bubbles are a strong buzz, FOMO (fear of missing out), and a momentum feedback loop. All three are present today, fomenting rampant speculation. Speculation is when people buy an asset not to use, but to sell in the future at a higher price. When the actual value of the asset is indeterminate, the speculator relies on the Greater Fool Theory, hoping that a "greater fool" will come along in the future to pay a higher price.
That Bitcoin is enjoying a strong buzz right now is undeniable. Speculators experiencing FOMO have an uncontrollable urge to jump in, without any clue as to whether the price is right. They just want on the train. This pushes prices higher, creating more FOMO, in a powerful feedback loop.
These are the same dynamics that created Tulipmania, the South Sea Bubble, and the dot-com and housing bubbles. Houses, companies, and even tulips have real value, but bubbles force market prices far higher than their sustainable values. Prices overshoot. That, more than likely, describes BTC today.
Cryptocurrencies and block chains are big deals that will change the world forever. But, which will survive, and what will they be worth in the future? That is practically unknowable. Bitcoin is the granddaddy, but we are already 3 forks in, and no one can say for sure which, if any, will prevail. Bitcoin's price (currently $4225 USD/BTC) is based almost entirely on speculation.
Scarcity creates value. In the future, with wider acceptance by sellers and Grandmas losing their private keys, BTC will become more scarce. That will force BTC value much higher, relative to fiat currencies.
I have no doubt that BTC, or whichever cryptocurrencies survive, will be magnitudes higher in value in the future. But, for now, this has all the fingerprints of a bubble.
So, if you have a long-term horizon for your investment, you should do fine holding a portfolio of cryptocurrencies. But, if you are a short-term speculator, trade with caution. You will most likely get shaken out at lower levels.
I recommend that you enter https://wcex.co/?ref=urq1g3D you will get 50 free WCX Tokens and 15% if you want to invest, this currency is now in the PRE-ICO stage and is the best time to invest!
These ICOs are coming out of the woodwork. But these guys have a good marketing plan: Take the crypto bubble, and add a pyramid scheme to build some buzz. But, hey, what is there to lose? Free pre-ICO coins for just supplying an email address? They just might succeed. BTW, I used your link, so you should get some more coin.
Here is my link for getting 50 free WCX tokens: https://wcex.co/?ref=iHMtqd9O
They seem legit.
good analysis bro!
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