A bubble is when price is not justified - page 2.

TanakabZX

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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.

bubbles happen when you start buying something just because you think someone will pay more for it? Isn't that pointing at gold and other valuable items or assets as well? Valuable things tend to grow higher in price as time goes on, the only thing that separate BTC from bubble is the high volatility part

so98nn

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Ahh, the use of "Moat" here, I am not sure if it really fits the context but I do imagine that in the world of economy you are directing it for pool of investments surrounded by the different asset values. Could be good comparison if we understand how economy, its cash in-flow/out-flow, valuing/devaluing works really. I would say it is fort of all the above things I mentioned and water surrounding to it is nothing but the investors, companies, businesses, government and what not which either converge the value of fort into smooth transition or bubble.
They are the one who creates the bubble and vice versa.

ven7net

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It is probably true that a bubble is when the price of an asset is too high. I think a great example of a bubble right now is the US dollar and its number of companies. To see this, you should turn your attention to the stock market and how much money the United States prints to support its companies. Hmm, but if the company's product is really in demand, then why print money for these companies? Yes, the answer is obvious, there is no demand, and the price is artificially supported. With cryptocurrencies, things are a little different. You can just be a holder of, for example, BTC, and thereby preserve its price and create demand in the market. But there are other problems for crypto, for example, price manipulation and the same pump for price growth. So the topic of bubbles will always be relevant and there is nothing we can do about it.

aysg76

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Bubble is ofcourse a different thing which is not the case with Bitcoin as if it was it would have been burst a long time ago.Bitcoin prices are not too much also because they are increasing with the rising demand in the market by investors and major corporations accepting btc payment system and they would not let any bubble currency to be listed with them onboard.The ponzi schemes and stocks or currencies are called bubble when they fail to deliver what they were made for and prices were too high even then also but this is not the case with Bitcoin as thousands of transaction are being settled on blockchain daily and it is still keeping up the pace.So for me it's a decentalized medium of payment or store of value not any bubble burst scam.

husnija

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many people have the wrong perception about it, that bubble often occur when we think that it has no value but becomes very valuable. people dare to speculate because has a big hand in influencing the market

zanezane

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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.

bocyaj

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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.

Shenzou

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The only reason that many saying that bitcoin is a buble is because they are not able to control it because it is not centrelized like the other assests which investors are used to, but the reason that people invest in bitcoin is because of the new ideas and the solutions to the fiat currency that have been forced on us to use for years, and that idea is what makes bitcoin a long terms investment that you can trust and invest in it because it represents the future and anyone who thinks its a bubble does not have a valid reason behind it.

wahyu wida

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Quote from: pealr12 on May 30, 2021, 03:09:13 PM

Quote from: fiulpro on May 21, 2021, 12:43:55 PM

Well I do believe that people think there bubble is basically when the price keeps going higher and higher and suddenly the price comes down drastically.
Which has happened to the market a lot of times but I do believe that this is not only essential but its also character of a Crypto, which essentially distinguishes it from fiat and other currencies. I do think that this is a term which was coined by people who have their balances only in banks and other Investments.
- For me if the price is low 🔅 you just need to buy and wait for the perfect opportunity to sell.
This is how the bubble works, it's essential for the whole market and it is through this that we see the redistribution of wealth.

What people think a bubble is and what the actual meaning is are different, people think this way because of misconception of the whole btc price movement, btc is seen by many as a high quality asset which is the reason why so much value is placed on it,
I certainly don't think btc is a bubble otherwise the price will not be able to recover after it crashes, that has not been the case, anytime btc crashes it comes back even stronger.

right, this is not a bubble, as it was before where btc fell to $3500, but we can see this year where btc is strong again. therefore many of the investors suddenly get rich, and there are also many new investors who lose a lot of capital at this time, because they don't have knowledge of crypto market behavior and just want to get money easily and quickly

pealr12

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Quote from: fiulpro on May 21, 2021, 12:43:55 PM

Well I do believe that people think there bubble is basically when the price keeps going higher and higher and suddenly the price comes down drastically.
Which has happened to the market a lot of times but I do believe that this is not only essential but its also character of a Crypto, which essentially distinguishes it from fiat and other currencies. I do think that this is a term which was coined by people who have their balances only in banks and other Investments.
- For me if the price is low 🔅 you just need to buy and wait for the perfect opportunity to sell.
This is how the bubble works, it's essential for the whole market and it is through this that we see the redistribution of wealth.

What people think a bubble is and what the actual meaning is are different, people think this way because of misconception of the whole btc price movement, btc is seen by many as a high quality asset which is the reason why so much value is placed on it,
I certainly don't think btc is a bubble otherwise the price will not be able to recover after it crashes, that has not been the case, anytime btc crashes it comes back even stronger.

Quidat

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Quote from: ene1980 on May 30, 2021, 01:57:26 PM

Quote from: wxa7115 on May 30, 2021, 01:32:46 PM

During that bubble there were many stocks that never recovered but from it emerged the tech giants of today like Google and Amazon, and something similar is going to happen to the market of cryptocurrencies, from all the coins that exist today only a handful of them will remain during the next decade.

I do share the same and we might not see many coins that are in the market today, when i started there were other hyped coins and some of the died eventually and after the arrival of the token market we started seeing a lot more shit coins in the market as it became easy to start a project to raise money and then keep on shilling to pump the coin and eventually the developers will cash out and shut the project altogether. We have seen many like that in the past and we will see the same trend in the future.

We would continually see up these projects as these creators would really see the potential for them to make easy profits if they were just lucky that the community would be hooked up when
it comes or talks in interest that it do shows. Yes, we might see or continue to look at that this market will be flooded by alts but as the years goes by those who had experience will
eventually just be on automatic ignore into these shitty projects as we do already aware on whats the motive in the very first place which is to steal and scam out investors money
and ran away excluding to those legit though but the impression would really last up. Thing here that noobs will be likely or always the victim on here so always Dyor.

ene1980

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Quote from: wxa7115 on May 30, 2021, 01:32:46 PM

During that bubble there were many stocks that never recovered but from it emerged the tech giants of today like Google and Amazon, and something similar is going to happen to the market of cryptocurrencies, from all the coins that exist today only a handful of them will remain during the next decade.

I do share the same and we might not see many coins that are in the market today, when i started there were other hyped coins and some of the died eventually and after the arrival of the token market we started seeing a lot more shit coins in the market as it became easy to start a project to raise money and then keep on shilling to pump the coin and eventually the developers will cash out and shut the project altogether. We have seen many like that in the past and we will see the same trend in the future.

wxa7115

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Quote from: Gyfts on May 22, 2021, 04:12:56 PM

Spot on. I remember going through the dot com bubble where a bunch of tech related investors lost everything, and that market didn't really recover. Bitcoin had unhealthy growth (I do hate to admit this tbh). It was nice while it lasted, but a bunch of naive investors treating it like a ponzi meant it had to crash at some point. Contrary to other bubbles, BTC will be back, I'm not worried.

During that bubble there were many stocks that never recovered but from it emerged the tech giants of today like Google and Amazon, and something similar is going to happen to the market of cryptocurrencies, from all the coins that exist today only a handful of them will remain during the next decade.

But those coins are going to become incredibly popular and most people around the world will use them similar to what happened to the Internet and related technologies back in the day to the point that understanding our lives without using bitcoin will be impossible at that point.

mu_enrico

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All assets based on scarcity are "in the bubble" because of price inflation, government print more and more money. The result is, everyone gets more money, but the assets supply isn't increasing.

Also, prices are based on perception so it's always "not justifiable" in the sense of everyone cannot value assets the same. The discrepancy in stocks, for example, aren't as wide as BTC because they have net income as the main expectation-reality binder.

Combine the (1) inflation and (2) expectation, you will get the mother of all bubbles.

bryant.coleman

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Bitcoin is not a bubble. But the problem is that many of the altcoins suddenly went up by 50x or 100x, which made them very much overpriced. And as a result of this, the entire cryptocurrency market was being talked about as a bubble area. In the end, always it is the Bitcoin holders who suffer because of these shitcoins. But the trick here is to hold for the long term. It may take some time for Bitcoin to recover, but ultimately that will happen. However, there is no such guarantee with the altcoins. For example take the case of TRX. That particular shitcoin was never able to reach the level which it attained in 2017.

TheGreatPython

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

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.

Well from your explanation, I wouldn’t even say that Bitcoin is a bubble. Bitcoin is a very good investment and if you look at it in several ways you’re going to see how good it is. Although that doesn’t mean that there are no ways that it has disadvantages, but it’s still worth it.

With that said, I know there will be people who wouldn’t believe that Bitcoin is not a bubble and that’s because they don’t have any clue on what Bitcoin is all about, and since they have understanding of it, they are just going to be making all kinds of assumptions that are totally wrong. But, with time Bitcoin to going to grow, and they are going to fully understand it.

BrewMaster

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Quote from: hatshepsut93 on May 23, 2021, 04:54:49 AM

The problem with Bitcoin is that there's no good way to calculate how much it should be worth like you can with stocks, it's all just pure guess and the fact how much money can people actually pay for it. Some people say that Bitcoin will be worth $150,000 or $500,000 - but if they truly believe it, why won't they sell all their assets for it?

the same is true with stocks. just because the big players who own the economy have defined ways of their own to calculate price of a stock that doesn't mean there is really a way to do it. stock price is also pure guess.
at least with bitcoin you see the utility and the scarcity then you look at the adoption and how many people can have how much bitcoin then you can come up with a good price.

dezoel

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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.

You are right but if you are investing in a company or say stocks then you can inquire and evaluate but how do you evaluate whether the current price of bitcoin is underpriced or overpriced? It's impossible because you cannot imagine who holds how much and what is going on in others' minds. You cannot even evaluate the demand and supply because once again, you just don't know who will sell what amounts, and as far as demand goes, I don't think Bitcoin is in super need or something. I mean there is nothing you can exclusively buy with bitcoins, so demand can't be calculated either.

But I fully agree with you if someone can analyze and evaluate whether the current price is underrated or overrated then it's much easy to make money because you just buy the underrated shares and short sell the overpriced shares. This is how most of the stock market kings operate.

jaberwock

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Quote from: fiulpro on May 21, 2021, 12:43:55 PM

Well I do believe that people think there bubble is basically when the price keeps going higher and higher and suddenly the price comes down drastically.
Which has happened to the market a lot of times but I do believe that this is not only essential but its also character of a Crypto, which essentially distinguishes it from fiat and other currencies. I do think that this is a term which was coined by people who have their balances only in banks and other Investments.

Bubble in simple words is when a big change happens, to most people. I don't think the price at $55k-60k was unjustified. There are more and more avenues to spend and trade bitcoins which only means that the number of people who use bitcoins are increasing.

I have never been able to understand this bubble and all, what I best know is to take advantage when everyone is panicking and sell them once everyone is overhyped about the prices and keep buying even when the price has reached its ATH. People kept buying dogecoins even when it reached some insane value like $0.8 or $0.7 and I was sure that this is just hype although I never tried to play with the market because there are giants manipulating the doge market and it was not worth it, but I was absolutely sure doge cannot sustain higher than $0.7 which I think was its ATH.

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Quote from: hatshepsut93 on May 23, 2021, 04:54:49 AM

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

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.

~~~

The problem with Bitcoin is that there's no good way to calculate how much it should be worth like you can with stocks, it's all just pure guess and the fact how much money can people actually pay for it. Some people say that Bitcoin will be worth $150,000 or $500,000 - but if they truly believe it, why won't they sell all their assets for it?

The question intrigues me. Each individual has primary needs and essentials. These are somethings you cannot trade for anything for you to be able to survive in this era.

So the question is why won't they sell all their assets if they believed the price is higher than what currently it is. The answer is very simple, people are not dumb enough to invest in one thing as they see it to have high value. Plus the different factors affecting BTC and the infamous "VOLALITY"

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