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Is the 2018 Price Crash Proves Bitcoin as a Bubble?

bitcoin

Bitcoin in 2017 went from just around $1,000 to going as high as near $20,000. It has been compared to the Tulip mania and even the dotcom bubble. For Nouriel Roubini who called Bitcoin as the “mother of all scams”, mentioned recently that the “crypto bubble went bust for good”. He even said that he felt “vindicated”. He ended his tweet saying that “So I will take a break for a few days from this toxic crypto Twitter. Waste of time to convince zealots”. Is Roubini correct in his assessment? Roubini is the NYU economist who was able to predict the 2008 economic crisis.

Just a Blip?

But of course, there are those who still believe in cryptos. For instance, you have Angel Versetti, who is the CEO of Ambrosus who said that “I wouldn’t compare the current state of the crypto market to the dot-com bubble”.

He added that “While there are similarities in terms of overvalued new technology startups with unproven or unsustainable business models that were incessant in both dot-com and crypto, the sheer scale of crypto and dot-com businesses are not comparable. I do not believe we are, or were, anywhere close to bubble with cryptocurrency”.

So what exactly is happening if it isn’t even a bubble? He believes that “We are experiencing a strong correction, but the bubble has not formed yet. All the bankers and financiers jumping onto the crypto train signal that the bubble is yet to come. I think when all cryptocurrencies and tokens will be worth 15-20 trillion USD, that will be a bubble”.

This wasn’t the first time that it happened. In fact, there were times when Bitcoin’s value dropped by 70 plus percent in the past. If you will look at the 2017 height of Bitcoin, it only represented the fourth-biggest price adjustment in Bitcoin’s last 10 years.

Bubble Can Create A Dominant Player

And even if there really is a Bitcoin bubble, there could be one cryptocurrency that will survive and even become bigger from there. For instance, though a lot of casualties resulted from the dot-com bubble, Amazon had its shares fluctuate from $300 in 1998 to $6 in 2000. Today, Amazon’s share price is at $1,500. Many believe that a great business idea will eventually meet its potential.

Matthew Newton who works as an analyst for eToro thinks that “Of course commentators have drawn comparisons between the current bear market and the dot-com bubble of the 1990s”.

He thinks that “While this is inevitable, I’d venture to suggest it’s not particularly useful—it’s a bit like proclaiming the end of the FTSE 100 at the end of 2008”. He believes that the bear market can weed out people who are just there to make a quick profit out of the industry. However, this can make people stay if they truly believe in the underlying technology which is blockchain.

Are you going to HODL or are you going to sell and minimize your losses at this point? Nowadays, you see the regulators doing their best to legitimize the industry. Recently, the US Securities and Exchange Commission went after ICOs that are selling unregistered securities.

 

John Jayme

John is a crypto investor, enthusiast and copywriter. He is in charge of daily news and other emerging trends in blockchain technology.

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