The Bitcoin Bubble Burst!
The Bitcoin Bubble Burst is all over the media as the price of Bitcoin has plunged by almost half since the beginning of January in a ‘bloodbath’ which has seen the total value of the market plummet by about £31 billion. Bitcoin has been called a ‘bubble’ for the past few years. There have been increasing comments of the ‘Bitcoin bubble’ bursting in the very near future because all of them do.
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The Bitcoin Bubble Burst!
The Bitcoin Bubble Burst is all over the media as the price of Bitcoin has plunged by almost half since the beginning of January in a ?bloodbath? which has seen the total value of the market plummet by about £31 billion. Bitcoin has been called a ?bubble? for the past few years. There have been increasing comments of the ?Bitcoin bubble? bursting in the very near future because all of them do.
What is Bitcoin Bubble Burst?
Bitcoin hast just lost more than 50% of its value within less than 2 months. ?THE BITCOIN BUBBLE IS BURSTING!!!? is all over the media. Back in 2010, there have been days where the Bitcoin price went up by more than 100% in a day, just to bounce down by more than 50% again. However, that was just daily fluctuation. Daily fluctuation is annoying, but doesn?t make people panic. What?s worse is when the price goes down ? and down ? and down ? and continues going down for a long period. Investors can?t recoup their losses by just waiting a couple of days longer and no one knows when the floor is reached. This is a real crash!
The economist Nouriel Roubini credited with predicting the 2008 global financial crisis said a 12% fall in the value of Bitcoin on Friday was the latest proof that the cryptocurrency was the biggest bubble in history and destined for a crash. Nouriel Roubini calls cryptocurrency the ?mother of all bubbles?. Nouriel Roubini is an economist who predicted 2008 crash.
Nouriel Roubini, professor of economics at New York University, said Bitcoin was ?the mother of all bubbles? favored by ?charlatans and swindlers? as it fell below $8,000 (£5,600) early on Friday, marking a 30% drop since the beginning of the week as investors became increasingly twitchy about a clampdown on cryptocurrencies by regulators.
?Policymakers and regulators are getting worried. Pretty much every G20 policymaker is talking about a crackdown,? Roubini told Bloomberg Television. ?We can?t allow it to become the next Swiss bank account for use by criminals and people evading tax.?He added that the 1,300 cryptocurrencies or initial coin offerings currently in existence were ?a scam?. ?Most of them are even worse and don?t have any intrinsic value like Bitcoin. So if Bitcoin is a bubble, it?s a bubble to the power of two or three.?
Bitcoin has lost more than half its value since hitting a peak of near $20,000 in the week before Christmas. Dubbed ?Dr Doom?, Roubini said the sharp fall was the beginning of a crash that would see the value of the digital currency plummet ?all the way down to zero?. The latest sell-off follows reports that US regulators are investigating whether the spike in the price of Bitcoin in 2017 was the result of market manipulation.
Robert Shiller, the Nobel prize-winning economist, said last week that while Bitcoin was a ?really clever idea?, it would not become a permanent part of the financial world. ?I tend to think of Bitcoin as an experiment. It is an interesting experiment, but it?s not a permanent feature of our lives,? he said, speaking at the World Economic Forum in Davos.
Reasons leading to Bitcoin Bubble Burst-
? Bitcoin faces a global backlash from regulators and governments India?s finance minister said the country did not recognize the cryptocurrency as legal tender, pledging to fight their use for ?illegitimate activities?.
? Digital currencies have also been hit by the news that Facebook is banning all adverts for cryptocurrencies. Ethereum, ripple, Litecoin and other digital currencies all suffered double-digit percentage falls on Friday as investors took fright.
? Critics have warned that Bitcoin has all the hallmarks of a classic speculative bubble that could burst, like the dotcom boom and the US sub-prime housing crash that triggered the global financial crisis.
? Bitcoin is not recognized by any central bank and currently allows people to bypass banks and traditional payment methods to pay for goods and services. Banks and other financial institutions have been concerned about Bitcoins early associations with money laundering and online crime, and it has not been adopted by any government.
? US regulators are investigating the Bitfinex exchange and a cryptocurrency company called Tether. They are questioning whether tether, whose coins are used to trade digital currency, are backed by US dollars as it claims.
? South Korea announced at the end of December that it was planning a crackdown on trading in the digital currency, preparing a ban on opening anonymous cryptocurrency accounts and new legislation to enable regulators to close coin exchanges if they felt there was a need to do so.
UK Prime Minister Theresa May said last week she was concerned that criminals were taking advantage of digital currencies. ?In areas like cryptocurrencies, like Bitcoin, we should be looking at these very seriously,? she said.
When will the Bitcoin bubble burst?
No-one can predict when a bubble will burst; this is true with the stock market just as it is with the cryptocurrency market. Bitcoin is often compared to various bubbles that have happened throughout history and are commonly fundamentally flawed in the comparison. This is most likely due to the lack of understanding of what Bitcoin, and what blockchain technology is.