Bitcoin Is Not A Bubble, The Dow Jones Is!

in #trading3 years ago (edited)


Bitcoin is a bubble and it just popped recently... I can´t listen to all that FUD anymore, especially as it´s in my opinion all just based on subjective perspectives, which are mostly still complying to the rules or aligned to patterns of traditional markets.

First of all the cryptocurrency space is moving much faster than traditional markets. I mean while cryptos trade 24/7 all year long the traditional markets simply close on weekends and are pretty much kind of unavailable over night. Summing up the hours cryptos are trading about 2-3x longer in a single week already.

That being said I´m personally just looking at a few months of the Bitcoin chart myself, which makes the whole picture look way different from the so often displayed bubble. For me it´s a bull market followed by the bears as usual.


Now let´s compare that Bitcoin chart with the equivalent time frame of the stock market, which will be roughly bit more than a year. I don´t know what you see but it looks to me pretty much like a bubble that just popped, right?


Of course this analysis of mine might not comply to the textbook and can be considered as totally wrong by some. But it´s not about giving financial advise here but rather about the fact that your perspective ultimately forms your opinion about something.

I simply believe that cryptocurrency are way different from traditional assets, much more volatile in their early stage and moving way faster. Therefore the traditional views on this market could just be not correct at all.

It´s all about perspective in the end. You don´t believe me? Try to look at the dow jones chart on a full screen and then minimize the window, simply make it more narrow. It´ll look way different already!

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if we see the history of bitcoin in last 4 year then in each and every year bitcoin go in downtrend in the month of Feb & march because of these two months are end of financial year & all fuds comes this time but at the end of march ww will see uptrend in the market.

There is definitely a pattern to be seen over the last years. Let´s hope it´s just the same this year ;)

yes Ialso wanted to say this

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We are already in Alpha 0.3 and just added Lore

I respect your passion but do not necessarily agree that it is about perspective. Theee are actual facts right now that are affecting things in the bitcoin / crypto space. And they are real and could change things somewhat dramatically.

Does this mean it is time to panic. Not yet, but it does point to that things got going way before they had a chance to be figured out and some things that were claimed probably do not have a chance of happening.

This is always the case with new tech but got highlighted even more with cryptos because of the marketplace that is set up and the over promoting being done in the space.

If you believe in the tech then the markets should be meaningless right now and in the near future. But if you only care about the cash, then you need to get with the flow of these markets. Understand how things are moving and get in and out based on those movements.

This strategy of Hodling sounds great and everyone has a story about how people missed out on something that popped but the reality is that when it is new tech, the majority of people that hold on too long get creamed. You need to understand the market and right now from what I see speculators are getting paid. So think like a speculator not an investor.

Other than that I cannot see where to hang a hat right now. The reality is that some of these companies including Bitcoin have to get a business up and going to show what this industry will actually look like and then we will see. I mean can any of them actually make any money? That will take at least 2 more years and probably up to 5. Until that time, learn to love roller coasters.


"The reality is that some of these companies including Bitcoin have to get a business up and going to show what this industry will actually look like ... I mean can any of them actually make any money?"

But you actually know that cryptocurrency are decentralized and therefore the exact opposite of a company? It´s not about making money but about enabling every single individual to handle his/her finances without any bank being involved. It´s about giving the power back to the people.

I can put a price on a company for the next 2-5 years but honestly I can´t put any price on Bitcoin for that as the potential is just too huge whenever people recognize it.

Correct, which is why they are called crypto"currencies", which incidentally trade 24/5 on the global markets. The price of a currency is based purely on the level of supply and demand for that currency (so because most global trade is priced in USD, there is a disproportionate demand for USD). We know supply will be limited. Right now, there is a lot of BTC demand from speculators and almost none from end users. The speculators are chasing volatility - which is the exact opposite of what end users want. To me, that is what is causing the price movements right now.
Incidentally, although I am a believer in Crypto, I think that the design flaws in BTC will ultimately prove to be fatal, so in the long term, I think BTC will end up losing most of its value.

Thanks for your comments.

I agree that some of the operating processes are decentralized but the organizations that oversee the processes operate virtually the same as companies. We can call them different names but their functions are basically the same. Also legally because of how they have raised funds from the public, there must be someone accountable.

Also, someone or group has to oversee things or chaos reigns. Further they take a financial stake in the "businesses" or they delegate that stake to someone else. In the end they produce a product or a service. Whether that is the creation and overseeing of a system that produces a coin or token, one that operates a blockchain based social network, or one that produces smart contracts. Look at Steem for example, the founders here have a stake and the platform sits on top of a decentralized foundation, but the business is fairly traditional. In other words, the underlying operating model might be "decentralized" but take away whoever oversees things and they move toward entropy. This is why I made the comparison.

In terms of valuing Bitcoin I agree with you that it is hard to project a value, but it is not difficult to figure out the things that will give it a value. In short if it is to be a "currency " it has to be stable and able to transact like all currencies do meaning immediately and predictably. If it is to be a currency transfer mechanism, it needs to be faultless and predictable. If it is a store of value, it needs to be bulletproof and stable. If you believe that it will be any one of these options, it can give indication of where Bitcoiin's prices might be going over time. The challenge is that many are saying it will be all of these. I cannot see how that can actually happen although I am open to hearing any ideas on how.

The challenge is right now is that there is not enough real data to figure out what we really have with Bitcoin (and the other currencies). So in my opinion, what we see is lots of speculation and hype and as always in situations where these are the circumstances around new tech, things are flying all over the place. As far as I can see, this is the new normal for a while. I have a few friends that are making a killing on Bitcoin's uncertainty right now. They have figured out how to buy low and sell high and want this chaos to go on as long as possible. In part a lack of regulation and to a lesser extent, the opaqueness of the marketplace fuels this. So if we want change (and we do), both will have to be seriously dealt with.

These are my observations.


hmm don't play bitcoin bro hehe

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Thanks a lot & I´ll give my best to do so ;)

All the DOW is is an established measurement be it completely arbitrary it doesn't mean much to the market nor to the average investor, it's just a metric to try and simplify the market.

Bitcoin is tied to exactly what is happening in the ecosystem in real time and that to me is far more valuable to everyone than speculative metrics

Stay engaged and keep learning. This is a tough time for the industry. Faith and good sense are needed. Oh and also contributions by those who want to see positive change. I do not know much about the stock or even Butcoin markets but I do know that anything new needs time to develop. Keep the faith.

like you read my mind. is it jelaousy or what that these so called 'expert' are picking on crypto. they'd rather stick to their Dow Joneses

For future viewers: price of bitcoin at the moment of posting is 7706.10USD

Ah, you will make them feel so miserable whenever they read that and the price is in the 6 digits already xD

Calling crypto a bubble is silly, 300 billion is nothing in the grand scheme of things.