A bubble is when price is not justified

wxa7115

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Quote from: AndySt on June 07, 2021, 05:22:42 PM

Quote from: wxa7115 on June 07, 2021, 05:11:43 PM

It is simply lack of understanding, I have made the argument in the past that if you see the developments of technology that has changed the world then you will see that those technologies look like a bubble as well.
The difference strives that bubbles in assets that are not useful will in fact go back to zero and the bubble will disappear, but when it comes to something as useful as bitcoin then it does not matter if we see an occasional correction, the price will not only recover but reach new heights as people keep adopting it because of its usefulness.

Let's not confuse the technology of a decentralized currency itself, and one of its embodiments in the form of bitcoin. What Yahoo represented at one time represented the breakthrough technologies that are now used by modern Internet giants, but this did not completely cancel out the fact that at the beginning of the century there was an inflating of the bubble of technology companies and then there was a collapse in the dot-com crash, which led to the disappearance of some companies and a huge loss of capitalization for others. Therefore, it is not necessary to confuse the inflating of the bubble in some asset and the technologies themselves that are at the core.

But then what happened? All of those companies that were just like the icos we had in 2017 disappeared and while good projects like Google and Amazon suffered for a time the truth is that they later recovered and became as dominant as they are today.

So I will maintain what I said, a new technology may give the impression of being a bubble but it is not, sooner or later the price will recover and will reach new heights which is what happened to those companies and it happened to bitcoin as well.

fara_buduk

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"$BTC is a speculative bubble that poses more risk than opportunity although many of its proponents are right about their argument as to why it is historically relevant. If you don't know how much leverage is in the run-up, you probably don't know enough to own it," said Michael Burry. ,but whatever it is we still believe bitcoin will continue and we can use it for long term investment and I react to it this happened because of several issues that made it so

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Quote from: sapnu on June 09, 2021, 12:29:33 PM

Then the statement that tells bitcoin is a bubble means it will only be considered as one if you percieve it like that. If you see bitcoin as an asset that can help you gain profit, regardless of the volatility of it, you are then considering it as something that is not a bubble. They say it only becomes a bubble once the price is justified, as mentioned by the OP, it is hard to determine if one is a bubble, you can only tell it as time passes by and as you buy it. In bitcoin's case I do not see it as bubble, I see it as a valuable wealth I need to obtain to secure my future.

Those sentiments would surely changed up when bitcoins price tends to crash into the floor and you would see lots of threads that bitcoin is a bubble and same goes on what happened wayback where 2018 crash did happen.

It isnt surprising for people to changed up minds and perceptions basing off into those things that they are current experiencing.For now the market is still in good shape despite on having a some correction but still its price do held on.

Bubble is something price isnt justified but we know the potential of some coins into this market thats why we can determine neither a bubbled price or not because everything will really be varying with the demand.

dmamigo

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Bitcoin or any cryptocurrencies becomes a bubble if the price goes up abruptly or you may say, suddenly without any solid justification for the rise. Often we have seen that the price goes up and then gradually crashes based on a particular Tweet or any other FUDs. The price rise based on these can be considered as a bubble because it goes up to come down. But in this process, few investors hold on to their cryptos which makes them more stable and preventing the fall to some extent or the price.

sapnu

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Then the statement that tells bitcoin is a bubble means it will only be considered as one if you percieve it like that. If you see bitcoin as an asset that can help you gain profit, regardless of the volatility of it, you are then considering it as something that is not a bubble. They say it only becomes a bubble once the price is justified, as mentioned by the OP, it is hard to determine if one is a bubble, you can only tell it as time passes by and as you buy it. In bitcoin's case I do not see it as bubble, I see it as a valuable wealth I need to obtain to secure my future.

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Quote from: magneto on June 08, 2021, 02:41:28 AM

Quote from: paxmao on May 21, 2021, 03:38:13 AM

A bubble is not about how high is the price of something (tulip bulbs, diamonds, dot-com stocks...), it is when the price is not justified. It is a bit for everyone to decide if the price of an asset is justified really, there is not a magic formula that will tell you if it is. In stocks or investments you can make a "discounted cash-flow" apply a rate of return and make some hypothesis about economy, growth and "moat" and at least you will get a number from it. On other assets, the price will be fixed by supply and demand (and that is the case for bitcoin) since they do not produce a regular cash flow.

When it comes to decide if there is a bubble, you have to think about how much is worth to you. How much would you pay to get, e.g. a 4% in dividend instead of spending the money today in a car or a TV? How much would you pay for a diamond or even a soccer ticket? (my personal for those two is quite low)? Or, How much would you pay for 1 in 21 million bitcoins?

Getting to the point, bubbles happen when you start buying something just because you think someone will pay more for it, instead of looking at how useful is it for you or for a community of people. Buying something is actually telling the market that they are wrong, and what you are buying is worth more than what the consensus means. This is being contrarian, anything else is speculating and creating bubbles.

Indeed. The absolute level have nothing to do with whether something is a bubble or not - and it is a common misconception that people think just because the stock market has been going up consistently over the last 40 years that it must be a bubble.

Sure, indices are at all time highs but along with it are fundamentals are earnings figures.

The same thing can be applied to BTC, even though DCF is obviously not applicable due to the lack of cash flows here. The level of adoption and institutional interest can be a gauge in BTC's fundamental valuation, and it's certainly in line with price action right now.

According to the book "A Random Walk Through Wall Street" it also has a lot to do with the way advertising is advertised, on the stock market there was a great wave of projects, in which one promised that through the internet they could perceive the smell, many rushed to buy these types of shares, because many of the brokers called on investors to buy, who did not know the shares very well but that would go up, and that way they were selling and the bubble was inflated, then it What happened and exploited those investors was left empty-handed and those responsible had left, many times we cannot be guided by what the influencers say.

In the case of cryptocurrencies there are many bubbles, cases of projects that become scams, that is why you must be very careful when investing, many factors must be studied, however, BTC has been called a bubble, but not , does not meet the minimum requirements.

oHnK

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Quote from: magneto on June 08, 2021, 02:41:28 AM

Quote from: paxmao on May 21, 2021, 03:38:13 AM

A bubble is not about how high is the price of something (tulip bulbs, diamonds, dot-com stocks...), it is when the price is not justified. It is a bit for everyone to decide if the price of an asset is justified really, there is not a magic formula that will tell you if it is. In stocks or investments you can make a "discounted cash-flow" apply a rate of return and make some hypothesis about economy, growth and "moat" and at least you will get a number from it. On other assets, the price will be fixed by supply and demand (and that is the case for bitcoin) since they do not produce a regular cash flow.

When it comes to decide if there is a bubble, you have to think about how much is worth to you. How much would you pay to get, e.g. a 4% in dividend instead of spending the money today in a car or a TV? How much would you pay for a diamond or even a soccer ticket? (my personal for those two is quite low)? Or, How much would you pay for 1 in 21 million bitcoins?

Getting to the point, bubbles happen when you start buying something just because you think someone will pay more for it, instead of looking at how useful is it for you or for a community of people. Buying something is actually telling the market that they are wrong, and what you are buying is worth more than what the consensus means. This is being contrarian, anything else is speculating and creating bubbles.

Indeed. The absolute level have nothing to do with whether something is a bubble or not - and it is a common misconception that people think just because the stock market has been going up consistently over the last 40 years that it must be a bubble.

Sure, indices are at all time highs but along with it are fundamentals are earnings figures.

The same thing can be applied to BTC, even though DCF is obviously not applicable due to the lack of cash flows here. The level of adoption and institutional interest can be a gauge in BTC's fundamental valuation, and it's certainly in line with price action right now.

I agree with the bubble concept you said. There will never be a single ratio that can measure the value of a stock, crypto or any other asset. Because the birth of the fundamental ratio is also based on mitigating losses on investments based on whatever they can compare. Our bubble indicator, the majority of the market makes purchases based on unfounded perceptions and is only influenced by lust for high returns later. In fact, with the majority of the market rushing in making decisions without doing many comparisons for consideration, it will create huge losses in the future. Bubbles will break easily with just one sentiment. Such is the current state of affairs in the crypto market. China's sentiment towards BTC, brought down the price by 50%.

magneto

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Quote from: paxmao on May 21, 2021, 03:38:13 AM

A bubble is not about how high is the price of something (tulip bulbs, diamonds, dot-com stocks...), it is when the price is not justified. It is a bit for everyone to decide if the price of an asset is justified really, there is not a magic formula that will tell you if it is. In stocks or investments you can make a "discounted cash-flow" apply a rate of return and make some hypothesis about economy, growth and "moat" and at least you will get a number from it. On other assets, the price will be fixed by supply and demand (and that is the case for bitcoin) since they do not produce a regular cash flow.

When it comes to decide if there is a bubble, you have to think about how much is worth to you. How much would you pay to get, e.g. a 4% in dividend instead of spending the money today in a car or a TV? How much would you pay for a diamond or even a soccer ticket? (my personal for those two is quite low)? Or, How much would you pay for 1 in 21 million bitcoins?

Getting to the point, bubbles happen when you start buying something just because you think someone will pay more for it, instead of looking at how useful is it for you or for a community of people. Buying something is actually telling the market that they are wrong, and what you are buying is worth more than what the consensus means. This is being contrarian, anything else is speculating and creating bubbles.

Indeed. The absolute level have nothing to do with whether something is a bubble or not - and it is a common misconception that people think just because the stock market has been going up consistently over the last 40 years that it must be a bubble.

Sure, indices are at all time highs but along with it are fundamentals are earnings figures.

The same thing can be applied to BTC, even though DCF is obviously not applicable due to the lack of cash flows here. The level of adoption and institutional interest can be a gauge in BTC's fundamental valuation, and it's certainly in line with price action right now.

ziennakarishma21

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Bitcoin is a bubble but maybe I don't think it's true,Bitcoin is now the most valuable digital asset to invest in today and its growth seems to be huge,with a profit margin extremely large. Therefore, it is impossible to consider Bitcoin as a bubble.

AndySt

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Quote from: wxa7115 on June 07, 2021, 05:11:43 PM

It is simply lack of understanding, I have made the argument in the past that if you see the developments of technology that has changed the world then you will see that those technologies look like a bubble as well.
The difference strives that bubbles in assets that are not useful will in fact go back to zero and the bubble will disappear, but when it comes to something as useful as bitcoin then it does not matter if we see an occasional correction, the price will not only recover but reach new heights as people keep adopting it because of its usefulness.

Let's not confuse the technology of a decentralized currency itself, and one of its embodiments in the form of bitcoin. What Yahoo represented at one time represented the breakthrough technologies that are now used by modern Internet giants, but this did not completely cancel out the fact that at the beginning of the century there was an inflating of the bubble of technology companies and then there was a collapse in the dot-com crash, which led to the disappearance of some companies and a huge loss of capitalization for others. Therefore, it is not necessary to confuse the inflating of the bubble in some asset and the technologies themselves that are at the core.

wxa7115

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Quote from: zanezane on June 03, 2021, 03:43:27 AM

Quote from: bocyaj on June 02, 2021, 06:35:07 PM

When the price of bitcoin at the low value.You should buy as much you can.Because the bubble will surely happened in the bitcoin market.So it will bring you some good profit.You should wait for the bubble.You should not sell at low price,for the demand of money.It will eaten your profit in a short period.

Why do people call it bubble when it recovers when it crashes and it didn't even pop in the first place, I think that calling bitcoin a bubble is a pretty stupid idea since bitcoin is still going strong, maybe when we see it crash to a negative, maybe that's when we will call it a bubble but I highly doubt that it will happen.

It is simply lack of understanding, I have made the argument in the past that if you see the developments of technology that has changed the world then you will see that those technologies look like a bubble as well.

The difference strives that bubbles in assets that are not useful will in fact go back to zero and the bubble will disappear, but when it comes to something as useful as bitcoin then it does not matter if we see an occasional correction, the price will not only recover but reach new heights as people keep adopting it because of its usefulness.

just_Alice

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Quote from: crzy on June 03, 2021, 05:54:03 PM

Quote from: just_Alice on June 03, 2021, 05:23:54 PM

On one hand, I agree with you, a bubble is when someone buys something just because, out of hype, people create this valuable "air" and want to make money, expecting that others will act the same, but in reality, they wouldn't have bought that item for even 1/10th of the current price, for instance.

On the other hand, that gave a thought about art and public sales. Say There's a certain painting, not even by a world-renown artist, and the price is pumped by several orders of magnitude just within hours, people surely aren't thinking about the real value at that time, they just want the thing. Isn't that a little like a bubble?

If you're in an auction place the scenario is really different and everything is a hype, because you have the pride and willing to do everything just to get the art that you want even if its not real value at all, aside from a well know artist. Bubble always happen on a hype project, we've seen many of this already in cryptomarket and if you are looking at some meme tokens now, you'll see that some of them already burst.

Yeah, but how does that differ from tulip mania? It was also just a hype and pride, but turned into an enormous bubble. The biggest problem here is that there's no such thing as value, objectively speaking. It is always people that define the value of things. Sometimes the value rises very fast and people can't even realise themselves if they truly value the thing or do they just want it at the moment.

hannahB4

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So I will like to know if the point you are portraying is that bubble doesn't have anything to do with price increment or just that when the price is high it is not justified but have it in mind I am asking in relation to bitcoin and not English wise.

Xinarae*

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While a bubble in crypto is not fair and puts at risk derivatives allow traders to speculate about future asset prices. Today many exchanges offer crypto trading having conversations with the core of the exchange helps you to win big in this business trading can be profitable if you have the right knowledge and risk management strategies to avoid external losses. Therefore you should and should take due diligence before trading your futures and understand both their advantages and risks understanding the risks of bubbles will make it easier to understand currency palm dumps.

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First and foremost, we have to understand that a bubble can happen to any industry, not just involving cryptocurrency. Seems to me that most are inclined to connect the term bubble with cryptocurrency all maybe because just like an e-book the assets here are just existing electronically, and we have to admit that many platforms and projects are just really start-ups with many more years to prove their value or worth. Now, am just intrigue...what if I decide to buy something because I am expecting that its value will be doing some rise or maybe pumps in the future, am I doing a bubble or not?

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Quote from: just_Alice on June 03, 2021, 05:23:54 PM

On one hand, I agree with you, a bubble is when someone buys something just because, out of hype, people create this valuable "air" and want to make money, expecting that others will act the same, but in reality, they wouldn't have bought that item for even 1/10th of the current price, for instance.

On the other hand, that gave a thought about art and public sales. Say There's a certain painting, not even by a world-renown artist, and the price is pumped by several orders of magnitude just within hours, people surely aren't thinking about the real value at that time, they just want the thing. Isn't that a little like a bubble?

If you're in an auction place the scenario is really different and everything is a hype, because you have the pride and willing to do everything just to get the art that you want even if its not real value at all, aside from a well know artist. Bubble always happen on a hype project, we've seen many of this already in cryptomarket and if you are looking at some meme tokens now, you'll see that some of them already burst.

AndySt

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Quote from: jaysabi on June 03, 2021, 05:09:27 PM

Quote from: zanezane on June 03, 2021, 03:43:27 AM

Quote from: bocyaj on June 02, 2021, 06:35:07 PM

When the price of bitcoin at the low value.You should buy as much you can.Because the bubble will surely happened in the bitcoin market.So it will bring you some good profit.You should wait for the bubble.You should not sell at low price,for the demand of money.It will eaten your profit in a short period.

Why do people call it bubble when it recovers when it crashes and it didn't even pop in the first place, I think that calling bitcoin a bubble is a pretty stupid idea since bitcoin is still going strong, maybe when we see it crash to a negative, maybe that's when we will call it a bubble but I highly doubt that it will happen.

I mean, a crash from 60,000 to 30,000 certainly suggests it was a bubble if it doesn't very quickly go back up to 60,000. We're far past the point now where any recovery would have proven it wasn't a bubble. We still can't get above 40,000, so there's nothing in the numbers that currently suggests it wasn't a bubble at 60,000. Even if it eventually gets back there, the numbers still prove out the bubble argument more than not.

That's right, talking about the bubble in the bitcoin market, we can do this only when the destruction of the bubble has already occurred, although a moment before that there would be a large bunch of experts who would reasonably and quite convincingly prove that the price of $ 60,000 is justified and market-based. Similarly, now another bunch of experts will reasonably argue that this was a classic bubble and the collapse was imminent. You just have to accept that the market, like all economic science, is not based on the same firm principles as, for example, physics and other exact sciences and various experiments in economics can give completely opposite results. So it's really easier to talk about a bubble, because the bubble burst and it actually happened.

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On one hand, I agree with you, a bubble is when someone buys something just because, out of hype, people create this valuable "air" and want to make money, expecting that others will act the same, but in reality, they wouldn't have bought that item for even 1/10th of the current price, for instance.

On the other hand, that gave a thought about art and public sales. Say There's a certain painting, not even by a world-renown artist, and the price is pumped by several orders of magnitude just within hours, people surely aren't thinking about the real value at that time, they just want the thing. Isn't that a little like a bubble?

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Quote from: zanezane on June 03, 2021, 03:43:27 AM

Quote from: bocyaj on June 02, 2021, 06:35:07 PM

When the price of bitcoin at the low value.You should buy as much you can.Because the bubble will surely happened in the bitcoin market.So it will bring you some good profit.You should wait for the bubble.You should not sell at low price,for the demand of money.It will eaten your profit in a short period.

Why do people call it bubble when it recovers when it crashes and it didn't even pop in the first place, I think that calling bitcoin a bubble is a pretty stupid idea since bitcoin is still going strong, maybe when we see it crash to a negative, maybe that's when we will call it a bubble but I highly doubt that it will happen.

I mean, a crash from 60,000 to 30,000 certainly suggests it was a bubble if it doesn't very quickly go back up to 60,000. We're far past the point now where any recovery would have proven it wasn't a bubble. We still can't get above 40,000, so there's nothing in the numbers that currently suggests it wasn't a bubble at 60,000. Even if it eventually gets back there, the numbers still prove out the bubble argument more than not.

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Quote from: jaysabi on May 21, 2021, 01:48:47 PM

Quote from: Ucy on May 21, 2021, 04:49:32 AM

What makes Bitcoin valuable to me is because it's unique, better and safer Network/System.

I don't think this is true. What makes bitcoin valuable to you is that other people think it's valuable. You wouldn't be paying $40,000 per coin if everyone else thought it was paying $10,000 just because it's "unique, better and safer Network/System." Your perception of what bitcoin is worth and whether it's overvalued or undervalued is inextricably linked to what other people think of it. If that wasn't the case, you would have never stopped buying when it was sub $1000. The problem was you didn't know what it was worth then, because nobody else did either. And nothing has changed there. Nobody still knows what it's worth because it's all just speculation, and the speculation is about what other people are going to think about it in the future that's going to determine its value.

An inability to value it and just investing based on speculation are why it's a bad investment choice for me.

That makes sense. I think most of the times people think bitcoin is too costly because one bitcoin is worth $40k or $60k whatever the price is.
But they look at the fact that they can own 0.1 bitcoin for $4k or $6k respectively too. I have experienced this because of many of my friends joined the crypto community lately.
Many started buying altcoins and thought bitcoin is overvalued and too expensive to buy. I made them understand that they still have the option to buy in decimals and own their bitcoins.
Many people look at the quantity and the how potential the coin is.

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