Topic: [2017-06-25]Last Stage of Bitcoin Bubble Yet to Occur, Says Economic Professor (Read 5658 times)

The mechanism is actually quite simple. When Bitcoin gets first popular in a country where there was low interest before, the number of people demanding Bitcoins is often growing much faster than the number of people wanting to cash out Bitcoins into the local currency. So the price is distorted to the upside. More demand, less supply = higher price.

In many of these countries it is difficult to transfer money to "international" exchanges. Or maybe there are possibilities (e.g. with credit cards) but people do not know too much about it. There are also many international exchanges that do not accept clients from all countries, so this may be an additional barrier.

For me, it has always been strange that on local exchanges the price of bitcoin is much higher. I can not understand why this happens. And the more I do not understand why people buy bitcoin at a high price on local exchanges, if you can buy cheaper on international

I don't know much about the situation in Japan and South Korea. But in India and Nigeria, the local exchange rates are much higher than those denominated in the United States Dollar or the Euro. In India especially, there was a sharp spike in demand after demonetization (November 2016). The spike is still there, despite the effects of the demonetization exercise waning away.

Very good comparison with Phoenix. But a little not exact. In fact, bitcoin has never been completely destroyed. It's just that its price was affected by bad news and rumors. But the technology of its use did not become worse from this.
Bitcoin is still developing and it is very inappropriate to say that he will die

Lately, there had been many so-called economic experts sharing their own expertise on the growth of Bitcoin and it seems to me that these people felt that they have to warn people against putting their money in Bitcoin. Yes, I understand the concern because after all we still in reality here and cryptocurrency is actually nothing if there would be a demand for it...any invention is nothing if no one can use it.

However, these people are not actually experts on Bitcoin. They are presenting their ideas and opinions based on the old school of economics but Bitcoin is supposed to be the disruption of this old system. Now, don't get me wrong here as I am also careful with my investment but I listen to all sides of the whole story.

How many experts have predicted that Bitcoin can be dead...a long time ago? How many predicted that Bitcoin will be a bubble burst...three years ago? Until now, Bitcoin continues to defy odds.

Bitcoin had been proclaimed dead many times but it seems to me that it is becoming like a phoenix that can rise up from the ashes it got mired into.

Believe it or not.

Mourdoukoutas' analysis hinges on a single unspoken assumption: that Bitcoin does not have the power to unseat the monetary incumbents of this world. He is wrong.

And so his analysis would make sense if Bitcoin was simply a beanie babies style fad asset, as he constantly implies.

But Bitcoin has now crossed that psychological hinterland into the public consciousness: even people that don't understand, like or own Bitcoin know it's a form of money. The rest, will be history

There are countries like Japan and South Korea, also maybe Nigeria and India, where we can already speak of a "mania". These countries were also fueling the altcoin bubble and local exchanges had, for much of the last few weeks, substantially higher Bitcoin prices than those recorded in USD or EUR. So that there was "still no mania" remains under question.

While the altcoin hype was almost sure a pure speculative bubble lead by the Ethereum "Flippening" dream and Litecoin with its code modernization, I am not sure if Bitcoin cannot hold this price level (roughly: 1800-3000 USD) for a longer timeframe. It will surely crash if there are no fundamentals behind the price rise (then it was a bubble, too), but this time it could be different because of the likely Segwit activation which would give Bitcoin air to continue growing.

So at the end the professor could be right in that there could be another bullish price rise, but I doubt it's because "there must be mania before the crash", but simply because optimism after a Segwit activation is justified by real facts.

According to Panos Mourdoukoutas, Professor and Chair of the Department of Economics at LIU Post in New York who is also contributing to several professional journals and magazines, such as Forbes and The New York Times, when the bitcoin bubble will burst, there will be a final stage, which he calls “mania”.

The professor explained that every bubble has the same attributes, which is often confused with healthy bull markets. The pattern starts with investor hype over a popular topic. This theme can be an exotic product or an emerging industry, which promises a major change to the world while making the investors rich during the process, Mourdoukoutas wrote.

Comparing the 12-month performance of Bitcoin Investment Trust Shares (GBTC) and SPDR Gold Shares (GLD), we will see a major difference. While GLD increased its value by 3.93 percent in one year, bitcoin surged by 390 percent in the same period of time.

According to the professor, accommodative central banks often finance the bubbles to grow bigger. In addition, market experts can also help prices double or triple by posting their predictions on social media creating buzz for the bubble. This phase of the bubble is called mania. Mourdoukoutas explained that, at this point, the theme reaches a cascade where no investor wants to be left behind.

The burst of the bubble can be expected when the early investors have already cashed out, and there are no new investors joining the club, the professor said.
Mourdoukoutas stated that the current run up of bitcoin and other cryptocurrencies has mostly the same as a bubble. He described BTC as an exotic asset, which has great and unique advantages. One of the most important is the attribute of bitcoin, which makes it a better hedge against global uncertainties than conventional hedges, such as gold. In addition, the cryptocurrency is a convenient form of payment, which can be used globally, however, has a limited supply of 21 million, the professor explained.

According to the economics professor, there is investor hype surrounding bitcoin. Many investors had become familiar with the cryptocurrency, who can use investment trusts, such as GBTC, to participate in the market holding a good position. In addition, there is an “ultra-low interest rate environment” associated with bitcoin, the professor states.

However, Mourdoukoutas explained that only one thing is missing from bitcoin’s transformation from bubble to mania: “a broad participation beyond the ‘pioneers’ and the ‘early adopters,’ to ‘early majority'”. That’s the point where the demand for bitcoin “reaches a cascade” and the mania starts. At this phase, according to the professor, the key majority of the investors rush to invest in the cryptocurrency for the “promise it holds, rather than the fundamentals it displays.”

If investment promises are not met with the end of bubbles and manias, money will be lost faster than it was made, according to Mourdoukoutas.
https://www.cryptocoinsnews.com/economics-professor-the-last-stage-of-the-bitcoin-bubble-is-yet-to-be-reached/