Will the Bitcoin Bubble Burst?
Ever since Bitcoin’s price started going up, and especially when it first reached the 4-figure mark in 2013, people from novices to financial experts have been calling it a bubble.
In fact, when it first hit a value of $31 in 2011, and then dropped back down to $2 within a few months, the “Bitcoin Bubble” moniker was quick to be applied. Those numbers are laughable compared to today’s $13,000 … but everything is relative.
Then when it reached almost $20,000 in 2017, to immediately lose 1/3 of its value in 24 hours … you guessed it. “Bubble.” (And they called it the “Great crypto crash” when it came down afterward.)
And yesterday, when it soared past $13,000 on the heels of news that PayPal was officially going to offer the buying and selling of cryptocurrency? Yup, many people were calling “bubble” then too.
This price record was almost 3x the lowest price of the year, which was $4,644 due to the “Black Thursday crash” on March 12, 2020. But the coronavirus pandemic caused that short-term crash, not a bubble burst, or the price would still be demolished.
What’s a Bubble?
According to Investopedia, “A bubble is an economic cycle that is characterized by the rapid escalation of market value, particularly in the price of assets. This fast inflation is followed by a quick decrease in value, or a contraction, that is sometimes referred to as a ‘crash’ or a ‘bubble burst.’”
Think the “Internet bubble” (a.k.a. “dotcom bubble”) of the late ’90s or the “housing bubble” of the 2000s. Those were quickly followed by the dotcom crash and the housing crash, respectively.
Bitcoin hasn’t exactly crashed. Not permanently, anyhow. Does that mean it still will?
Not necessarily … because many financial experts don’t agree that it actually is a bubble (and neither do we).
Why Bitcoin Is Not a Bubble
Here are five reasons why Bitcoin is NOT a bubble: