Friday, 23 June 2017

The Imminent Frenzy of the Bitcoin Market

In the past year, the growth of Bitcoin has undergone a revolution, taking the cryptocurrency’s value from hundreds of dollars to the point of surpassing $3000. And analysts consider it to be in an economic bubble of sorts, that is close to undergo a frenzied hysteria, right before bursting.

Every economic bubble differs from each other, and this applies to all types of assets. And this can be misdiagnosed as a prognosis for never ending growth in Bitcoin valuation. There are several things that you can look out for in order to spot them correctly, as they all go through several phases. Firstly, there’s the beginning of the rush to invest into the newest, emerging financial game changer that forecasts a dramatic global change and will carry people into becoming billionaires in the process.

After that is done with, things carry on, and the good old folks at wall street create the methods for a widespread investor participation significantly easier, these could be mutual funds or ETFs. This all turns the rushing to invest into a financial domino effect, affecting prices amongst other things.

Afterward, central banks facilitate the bubble to develop further. Followed by the array of experts making sensationalist declarations in the media in order to manufacture excitement and force prices to rise rapidly, sometimes growing to twice, and even four times as they were original. Then, all people who withheld until the last moment jump in as to not want to be left out of it all.

Then, it’s pop goes the weasel and the bubble explodes. The early investors that played a part in taking it to this have already capitalized, and there’s nobody else looking to get in on the action because there is none.

The continuous growth of cryptocurrencies like Bitcoin have all the defining characteristics of being inside a ever growing bubble, with people preaching about it as well as selling bitcoin to buy more is a topic that is becoming more and more mainstream. As an asset, bitcoin is very exotic, as well as being extremely convenient and having a supply that’s limited by design.

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