Back in December 2017, when Bitcoin reached its all-time high, there were those who frantically warned against the Bitcoin bubble. Looking back over the last couple of months, one can’t help but wonder if the Bitcoin bubble has indeed burst?
What is the Bitcoin bubble?
The Bitcoin bubble is described as an economic bubble that occurs during a period of excessive speculation. Examples of past economic bubbles that have burst include the dotcom bubble as well as the tulip bubble. These markets performed exceptionally well until the supply exceeded the demand for the technology and consequently, the market crashed.
According to Coinmarketcap, the total market cap of cryptocurrencies has dropped three-quarters of its value to just above $200 billion. In December Bitcoin reached its all-time high of $20 000 and is now hovering in the area of $6 000.
Clearly, the market has shrunk. The reason may be due to the hype that has subsided and its extreme volatility. Then there is also those who bought Bitcoin when it peaked and have consequently lost a great deal of money. Some of these individuals who may suffer from FOMO and bought Bitcoin high may now be referring to Bitcoin and cryptos as a whole as a scam. Many of these have no choice but to hold onto their Bitcoin until the price reaches a new all-time-high.
Has the Bitcoin bubble burst?
Bitmart Senior Trade Analyst, Rudner de Witt says a small bubble may have burst this year but it is definitely not a big bubble.
“In a way, a small bubble may have burst but remember that the dotcom bubble burst at $25 trillion. Bitcoin and cryptocurrencies are far from this.”
He compares Bitcoin graphs to that of gold and dotcom and says the graphs look exactly the same. “The only difference is that Bitcoin has moved 100 times faster than gold and dotcom due to its technological advances. When looking at Bitcoin in that regard, we are currently at a low point and there is much room for growth. There is no bubble burst in sight yet.”
At the moment, Bitcoin is moving sideways and from here it can only go up. Rudner disagrees with analysts and spectators who speculate that the Bitcoin bubble will burst this year.
“It is a stupid statement, the price of Bitcoin is already quite low. When looking at mining machines, when Bitcoin reaches a certain low price the machines will be shut down and the network will go off. At the moment, people are still mining and buying mining machines. Since miners are the backbone of Bitcoin and cryptos, it is clear that the bubble has not burst.”
Is a Bitcoin bubble burst possible?
However, Rudner does not deny that a big Bitcoin bubble is possible. He clarifies by saying that Bitcoin’s current price correction of 70% is nothing new. This is the third time in its history that it has corrected to such an extent.
“This is nothing new. One has to keep in mind how trading seasons affect the market.”
He also refers to the hashrate of Bitcoin miners and says that this is going strong. The strength of the hashrate is directly linked to the price of Bitcoin.
It is interesting to learn that Bitcoin is the first generation crypto, followed by Ethereum and Neo as the second generation. Cryptos such as ADA en hashgraph is the third generation that does not need miners. Rudner says the future looks bright for the third generation cryptos.
All eyes are on the SEC’s decision on a Bitcoin ETF that is scheduled to take place on 30 September. Rudner says this will have an enormous impact on the price of Bitcoin. The price might explode if the ETF is approved.
In conclusion, Rudner advises investors to buy cryptos that have good technology and blockchain development behind them.
“The top 20 coins on the market have basically addressed any and all issues relating to cryptos. These are good buys regardless of what ICOs may promise. A smart contract is a smart contract.”
Read Bitmart’s blog on “Best advice for surviving a crypto blood bath” for helpful tips.