How Much of a Bubble is Bitcoin, Really?

Even those who’ve never invested in Bitcoin before are starting to keep a closer eye on its progress. That’s because the currency has recently soared in value, causing the people who own Bitcoins to get excited and wonder how much more the worth could climb.

There are even instances where people with no former interest in cryptocurrency feel now is the time to start becoming involved in the Bitcoin boom. But some onlookers wonder, will the bubble burst, and if so, how long from now?

Bitcoin shows many signs of a classic bubble

Derek Thompson, who covers economics for The Atlantic as a senior editor, notes it’s hard to determine if Bitcoin is a bubble because it’s an entire industry. However, he thinks Bitcoin’s recent patterns are akin to other famous bubbles that burst — such as the dotcom bubble.

Bitcoin is a topic on everyone’s tongues and minds. Investors make huge life decisions based on Bitcoin worth, and they often make impressive predictions about what’ll happen in the future. People also made those actions in association with other things that went bust, leading individuals to caution history will repeat itself. They say the only thing they’re not certain about is when it’ll happen.

Bitcoin volatility is a constant

One of the reasons why people are buzzing about Bitcoins is because their value has skyrocketed so much. At the beginning of 2017, a Bitcoin was worth $1,000. Now, its value is $5,000. Then, there was a point in September where the per-coin value was nearly $5,000, but it tumbled to $3,200 only two weeks later.

For a broader perspective though, it’s necessary to realize that altcoins — any cryptocurrency that’s not Bitcoin — also fluctuate. That reality could theoretically contribute to worries that Bitcoin is a bubble. They might assume that Bitcoin is as volatile as all the other cryptocurrencies, but compiled market statistics actually indicate it’s the most stable.

Even so, some people who intelligently track the market expect volatility. Dave Birch, founder of Consult Hyperion, a leading consultancy in the field of electronic transactions, has even said, “One does not invest in Bitcoin, one gambles in Bitcoin.”

He backs up that belief by advising people to only invest as much as they’re prepared to lose. If individuals actually did that, the possibility of a bursting Bitcoin bubble wouldn’t be so frightening. Instead, many people have moved all their investments over to the Bitcoin world.

Anonymous transactions and lack of spending options cause raised eyebrows

A characteristic that attracts many people to Bitcoin is the ability to send and receive money without revealing personal information. They also love the lack of government regulation and feel that by investing in the Bitcoin market, they have more financial freedom.

However, Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, calls the idea of private Bitcoin transactions questionable. He doesn’t believe the world’s governments will allow the lack of personal identification information associated with Bitcoin to persist forever and brings up how in the US. The IRS has already demanded some user records associated with the Coinbase website…

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