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Bitcoin bubble explode1/30/2024 Whether it arises as a result of the introduction of regulation, which, admittedly may be difficult to enforce or, as a result of major frauds in cryptocurrencies generally, or some other factor, the confidence will be shattered at some point.īy then, the smart money will have been converted into more mainstream currency and it is likely to be those that found themselves swept up by the mania who will lose the most. Many Bitcoin market participants will be honest, law-abiding citizens but you can be certain that the currency will be linked to a significant amount of criminal activity.Įconomic bubbles are fueled by false confidence or, ignorance and we strongly believe that this one will burst spectacularly. Whilst Bitcoin has now entered the mainstream with related trading now occurring on major exchanges, there are many uncertainties about it and its kind.Ī significant amount of Bitcoin transactions for goods and services historically took place on the dark web where the transactions are, invariably, for ‘dark’ things of one type or another.Įvery Bitcoin is numbered and traceable but for a small fee you can break the trace through something called a crypto-tumbler. And then it doubled, and then did so again, and again, and again.Īt the time of writing Bitcoin is trading at $17,070 and it is not inconceivable that the spectacular increase in value will continue to tempt new investors, which will see the price pushed up even further – before it collapses.Ĭryptocurrencies are as good as unregulated by any real sense but this won’t always be the case. But by January this year, the price had recovered to its 2013 high. However, those that bought in at this point saw 75% of their investment wiped out over the next two and a half years. Less than 11 months later, it had increased by a further 7,000% to reach $979. From mid-2010 to the start of 2013 the price of Bitcoin varied widely but ultimately increased by more than 167,000%, from a low of $0.008 to more than $13. Like everything else, Bitcoin is only worth what anyone else is prepared to pay for it and that price has largely been fueled by significant demand which has been fueled by the significant rise in value. Louis FRED, GlobaFin and Convoy Investments)īitcoin, introduced in 2009, was the first of the new online currencies and its value has seen spectacular volatility and growth. (Image: Elliot Wave International, Yale SOM, St. Research from New York-based, Convoy Investments released this week concluded that the Bitcoin bubble has now surpassed that of tulip mania as the biggest ever economic bubble, as shown in the chart below. It is a computer-based currency known as a cryptocurrency of which there are now well over a thousand. Unless you have been living in a bubble of your own, you can’t have failed to have heard of Bitcoin. Tulip mania as it became known, remained the biggest, recorded speculative bubble in history – until now. In fact, at one point, at the height of what became an incredible, speculative bubble, single tulip bulbs were reportedly exchanging hands for more than 10 times the annual income of a skilled craftsworker and one particular variety was worth upwards of five times the cost of an average Dutch house at the time. Just under 400 years earlier, such a bulb would have cost considerably more in today’s terms. During a trip to Holland last year, I visited a Tulip Museum and purchased a large Amaryllis bulb for just eight euros.
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