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Is Bitcoin a Bubble? Is this like the dot com boom and bust? A critical look at these ideas and more following the Crypto Market Report.
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Crypto Markets are down across the board.
Bitcoin is seeing sub $2000 prices with Poloniex leading the exchanges on volume with the Ripple and Ether pairings on top. The Poloniex BTC/USDT pairing dropped as low as $1600 earlier today. Koreans are still paying a premium with Korean exchanges showing prices over $2400.
Looking at Ethereum, Korean exchanges are topping the volume charts with 30% the market volume and a price premium of $180. The latest news is that one of the biggest Chinese exchanges Huobi is adding Ether today.
Dash is back under $100 but just as bitcoin and Ethereum, Korean exchanges are trading at $120.
Most other coins and tokens are down 20-45%
There are many like it but I’m linking to a recent Forbes article that begs the question is Bitcoin a Bubble? I will attempt to answer it for bitcoin and crypto currencies at large. No, it is not a bubble. As we discussed in episode 208 of Neocash Radio, what you are seeing is the next stage of mass adoption, not the iphone in every hand stage but an earlier stage. Think the first wave of internet capable phones. You know the 1x years where internet was text based and highly pixelated. That’s the stage that crypto is in now. The User Interface of most clients is unrefined and strictly functional. Just installing the software for some coins requires a modicum of IT knowledge and confidence. It’s rough, it’s sometimes dirty, and it can be challenging but it works. It works so well that we have a massive influx of new users and new money.
The dot com bubble saw a rise in financing for a vast array of internet ideas and solutions. Many of which did not pan out. In that sense this is exactly like the dot com scenario. You have hundreds of blockchains competing for a piece of the future pie. Many of the projects have little more than a minimal viable product. Some have little more than a white paper. Many will fail and several others will usher in a new age of digital humanity.
There are many differences between the dot com era and today. For one, with many blockchains you have a level of transparency that allows anyone to scrutinize every transaction. Secondly, the software is open source and is often reviewed by numerous experts. Third, the core community is a tenacious, intelligent and often unforgiving. Many in the community have seen or felt the sting of a scam, rip off, or simply a bad trade. They will see the red flags and they will shout. There are very few places to hide and the fickle marketplace can giveth just as quickly as it taketh.
As I mentioned in the Crypto Market Report, Coinbase has had a massive influx of new accounts each potentially bringing with it a fiat to crypto transaction. The crypto markets are being flooded with fiat from many as of yet untapped sources like Korea, Japan, and Australia to name a few. JPMorgan, Toyota, and Fidelity are also investing in blockchain technology. This is not a bubble. It is the next wave of mass adoption. This trend will continue. This is my imperfect forward-looking assessment:
- There will be a surge upward that generates news and attracts new money
- New traders buy in pushing the trend higher
- New heights cause a mix of euphoria and trepidation
- The wave crests – a decline will happen locking most of the money in the market (who wants to sell for a loss right after getting in?)
- Repeat but now those new traders are seeing gains – some cash out and are replaced by new money, some double up
Its organic, massive, and nigh unstoppable. Welcome to the future.
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