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RE: Cryptocurrencies: Do Not Think Billions, Think Trillions!!!!
Thank you for your comment and you bring up good points.
However, let us look at the bubbles we witnessed.
The US housing market was in a bubble and collapsed to the tune of 30%-40% when no more than 10% correction was ever seen.
The equities market in the dotcom era were in a bubble and dropped 40%-50% when a correct of 10%-20% is the norm.
We know that Bitcoin has huge volatility. 20%-40% corrections are the norm....they can happen in a couple of days to weeks. We witnessed this throughout 2017.
So I ask you what kind of pullback is needed to be a bubble for bitcoin. Based upon the percentages, you would have to see 75%-90% to align with historical norms of other bubbles.
Do you see that as likely?
From the first time that bitcoin passed 1000, it crashed more than 80% and then took years before passing 1000 again after the crash.
I think that if bitcoin crashes more than 50% and then takes more than 2 years to recover to previous highs, we will know it was a bubble. (That's nowhere near impossible now that bitcoin is past 7000. I don't see a crash to below 2000 as anywhere near impossible. A crash below 3500 is quite possible... and that's if bitcoin doesn't keep running. If it hits 10000 this year (as so many think possible, and in a bubble, anything is possible, it would only need to crash to 5000...)
But remember, it's not the crash that confirms it was a bubble. As you correctly mentioned, we see 20-40% pullbacks frequently, and 20% in the stock market would make it a confirmed bear market.
It's the shattered confidence and the resulting lingering for years before passing previous highs that proves it was a bubble.
Since bitcoin's bubble is tied to the easy money that is blowing up bubbles across other markets, it could keep running until everything pops, and then it will probably be years before it recovers as there won't be ready VC money next time it pops.