The Dutch Tulip Mania is one of the most famous bubbles of all time, for the scale of the bubble, the scale of the collapse, and probably including the seemingly obvious nature of the bubble considering the extremely limited functional utility of tulips. Bitcoin has now surpassed the multiples of value appreciation at the height of the Tulip Bubble (and by a wide margin). While this itself is not proof that Bitcoin is a bubble or that a collapse is imminent, it's worth considering if there's a lot more risk buying at this price (currently bouncing around $17,000) than anyone on these boards seems willing or able to recognize.
Thoughts?
Commentators in the media are discussing the rapid growth of bitcoin, the price of which has surpassed the $ 10,000 mark. Most agree that bitcoin is a bubble, and the only question is when the bitcoin bubble bursts.
On the BBC, the author immediately admits that he personally enjoyed the growth of bitcoin profitable. In April 2016, he bought 0.17 bitcoins for $ 87, and in 18 months, his purchase was worth 1713 dollars. The author stipulates that most of all it resembles a bubble of a new generation - the "tulip fever" of the era of high technologies.
However, despite this similarity, bitcoin has so far demonstrated enviable stability. During his rapid growth there were several cases when it seemed that he was about to fall in price. But whenever experts threatened that the bubble would soon burst, the currency simply slowed down for several days, after which it resumed.
During this race, the author notes, bitcoin has lost the main property of the currency: it is no longer used as an intermediary for exchange. A couple of years ago there was a lot of talk about how you can spend bitcoins. Some shops, pubs and cafes accepted payment in this currency, and it was considered fashionable. But now no one wants to spend it, because it seems to everyone that it is more profitable to wait until it is more expensive. In addition, transactions with bitcoin have become much more difficult than before, because the cost of transactions also increases, and the authorities of many countries treat them with caution, suspecting them as a sign of money laundering.
The main factor overshadowing the future of bitcoin is the energy cost of mining new ones. According to some estimates, the production and registration of new bitcoins now consumes as much electricity in a year as it takes to supply Ireland in the same year. Therefore, the higher the price of bitcoin, the less stable it looks from the point of view of both the economy and the environment. In this regard, the author concludes, referring to folk wisdom, it is important to monitor what the big financial players say. While they abuse investors buying bitcoins, for stupidity, like JP Morgan Chase in October, everything is fine. As soon as they begin to say that there is a future for crypto-currencies, this will be a signal that it's time to sell.
Zoom out on the price chart a bit and identify which part has demonstrated any stability, let alone
enviable stability, which I would peg to a high standard. In the past 30 days, the price has halved from $12,000 to $6,000 and then rebounded to near $12,000. Nothing about those price movements or the time scale they happen on suggests any bit of stability to me.
