- Tram Ho
The Bitcoin bubble has been one of the economic mysteries of recent times when the virtual currency rose dramatically during the Covid-19 season. The question is, why is this unrecognized central bank asset accelerating dramatically and not falling apart completely?
A Goldman Sachs study shows Bitcoin’s bullish pattern over the past 12 months with the breakdown of the biggest financial bubbles in history. Accordingly, Bitcoin should have dropped when it peaked, similar to the theoretical progression of a bubble.
However, Bitcoin still increases in price, even if it decreases, it is just a correction session. So what’s going on? Is Bitcoin not a speculative bubble?
Compare the Bitcoin bubble with other historical bubbles
In fact, if you look at Bitcoin price data over the past 10 years, this speculative bubble has broken four times without anyone noticing. The strange thing is that while the other financial bubbles deflated before they did not rebound, Bitcoin was different. The virtual currency market also deflated four times but quickly regained speculators’ attention afterwards.
This is quite a rare thing for a financial bubble when it collapses and then grows back out of the box. Usually a financial bubble has to wait a lifetime to heat up, but this is happening a few times with Bitcoin.
Many people today think that Bitcoin only adjusts to increase in price, but in fact this is a speculative bubble when the real value of the currency is not so high. Despite being assessed as a new payment instrument and anti-inflation asset, no consumer wants to use such volatile currency. That’s not to mention more than 90% of the Bitcoin market value is in the hands of less than 3% of accounts opened.
With a market that has no one to manage and no one to compensate or be responsible for, it is clear that Bitcoin is a speculative bubble waiting to break. The difference is that it has broken several times but few people learn the lesson.
According to Bloomberg, central banks will never give up control of the monetary system and Bitcoin is nothing more than a financial bubble that costs energy and pollutes the environment. However, the technology of cryptocurrencies and Blockchain is worth learning and more and more governments are working to use them.
According to Bloomberg, the Bitcoin bubble has broken four times in the past 10 years
China is an example of banning Bitcoin but issuing its own digital currency. This is the country with the highest rate of users paying online and the largest e-commerce in the world. At the same time, more than two-thirds of Bitcoin miners are located in this country.
Obviously Bitcoin players have to accept the fact that the world is changing to adapt to digital currencies and Bitcoin will lose its foothold if it is only speculative. In the Bloomberg post by author John Authers it is clear that spending money on “trust” will never be safe in the financial markets.
The lessons of history have proven that, but people still believe in a virtual currency future, an asset that can replace gold, a new tool for the financial and monetary system. But maybe Bitcoin will never turn out to be like that when people are crazy about pouring money here just for profit.
The Bitcoin bubble has broken four times and it won’t fall back to $ 0 until the speculators run out of greed, or they’ve found an alternative new bubble to dive in.
Source : Genk