In 2017, Bitcoin has officially reached mainstream status. Almost everyone knew what Bitcoin was and a lot of people wanted to be part of the action. Now, for its proponents, they believed that it is the next best thing. There are even some who think that Bitcoin could still come back and beat the near $20K record. However, the reality is quite different. Despite the optimism of some in today’s bearish market, it costs more to mine Bitcoin than its actual price. In reality, there are still miners that were able to gain profits from this venture such as those miners located in China.
But the real question is if Bitcoin is really a bubble? Keep in mind that Bitcoin during the start of 2017 was just around $1,000. By mid-December, it was able to reach near $20,000 only to plummet by more than 80 percent in the next twelve months.
If you are going to ask Matt Hougan who is the global head of research at BitWise, he believes that Bitcoin is a bubble. He mentioned in Bloomberg that “It was a massive run-up and a massive pullback”. He added that “(It was a) total bubble”.
However, is it a bad thing to call Bitcoin a bubble especially from someone who is the creator of the world’s first crypto index fund? Though it has a negative connotation, it has increased the interest in blockchain technology and in the crypto market. He mentioned that “It did the same thing that happened with the internet, which is it attracted a huge amount of talent. It did bring a lot of capital and interest in development to the ecosystem”.
He said that “I do think interesting things will be born from that. But, yes, it was a difficult year in 2018”.
Lack of Adoption
Adoption was the thing that many crypto observers were waiting last year. In fact, there are a number of things that may have stopped the progress of adoption. First, you have the regulations. You have countries like China banning cryptocurrencies while you have Japan, on the other hand, that is willing to accept cryptocurrencies.
In addition to this, the number of hacks also didn’t help. Hacking incidences may have proven that Bitcoin isn’t so secure after all especially when you leave it in crypto exchanges.
As for the entry of institutional investors, until today, institutions are still not committing fully towards cryptocurrencies. Even the US Securities and Exchange Commission chairman Jay Clayton is hesitant towards the idea of having a Bitcoin ETF.
95% of Other Cryptos to Suffer Painful Death?
For Hougan, he also believes that 95% of the other cryptocurrencies are bound to fail. He mentioned that “There are 2,000 cryptocurrencies out there: 95 percent of them are useless and will die a painful death. The sooner that happens, the better” He also added that “But from those ‘ashes’ will emerge important things. Just like from the dotcom ashes emerged Amazon, Google, and Facebook etc”.
Is it expected that Bitcoin is going to recover along with the other top cryptocurrencies? If you will follow Hougan’s logic, he remains optimistic despite the label that Bitcoin is a bubble.