(Newswire.net — October 3, 2019) — Cryptocurrency has been big in the trading community for years. When it comes to big-name digital currencies, Bitcoin is one of the largest – after all, even if you don’t know anything about the world of cryptocurrency, you’ve likely heard of Bitcoin before. Capitalize on the rise and trade your Favorite crypto pairs by using xbitcoin club tools to build winning trading strategies and apply risk management tools to reduce trading risk by more than 50%.
However, despite Bitcoin’s fame, it’s a hot topic of debate whether or not it’s worth investing in the cryptocurrency. There’s also much speculation about whether or not it’s in a financial bubble, and everyone seems to have differing opinions.
To answer all of these questions and more, it’s best to get a bit of backstory by starting at the beginning, centuries before the Bitcoin bubble and its many bursts.
Before the Bitcoin Bubble
Bitcoin is not the first bubble to burst. In fact, financial market bubbles date back to the seventeenth century. The first that was ever recorded was the Tulip mania, which occurred in the Netherlands from 1636 to 1637. At the time, tulips were very fashionable and fairly rare as they had only been introduced to the market very recently. During the Tulip mania, the price of tulip bulbs skyrocketed to almost unbelievable amounts. At the height of this mania, records show that some bulbs sold for over 10 times the annual income of a skilled craft worker of the time.
However, as quickly as the bulb prices rose, they fell at an even steeper rate, plummeting seemingly overnight, partly due to the fact that many people had begun to purchase bulbs on credit. While there are no reported instances of anyone going bankrupt from this crash (although they did lose money), it just goes to show that, oftentimes, what goes up must come down.
What Was the Bitcoin Bubble Burst of 2018?
Bitcoin’s success has often been compared to the Tulip mania. Just as the Dutch financial phenomenon grew at an until then unheard-of rate, the price of Bitcoin swiftly increased from less than $1 in 2010 to its peak price of just under $20,000 in 2017, only to fall by about 80% over the course of 2018. Just like with the Tulip mania, Bitcoin’s price rose in a manic fashion (in 2017 alone it went from $700 to over $19,000) and many people lost capital because of the burst of the Bitcoin bubble.
So… Is Bitcoin Still a Bubble Today?
All of this brings us to the burning question in many peoples’ minds: is Bitcoin still a bubble today or has that bubble permanently burst? Financial experts tend to agree that no one really knows for sure. However, that doesn’t stop many people from forming their own opinions on the topic. Those who believe it is argue the following:
- Just like the focus of many financial bubbles in the past (the Tulip mania springs to mind), Bitcoin isn’t tangible, meaning no government would back it up
- It’s been overhyped and inflated to a higher degree than is warranted, meaning that most people don’t want to buy it, they just want to flip it and make a quick buck – again, just as bulbs were treated during Tulip mania
People who think it isn’t give these reasons:
- They believe Bitcoin still has consistent value despite frequently fluctuating
- Bitcoin’s constant fluctuation is a positive – many investors see it as a financial gateway and find it appealing that the price could skyrocket soon after they purchase it
- The Bitcoin bubble has burst four or five times since 2010, and has always come back strong
In short, it’s pretty much impossible to know for sure whether or not Bitcoin is a bubble – and, honestly, it varies depending on who you ask. If you’re considering investing, it’s important to keep in mind that Bitcoin shares similarities with the Tulip mania of the seventeenth century and that it has already experienced some crashes in the past. However, it’s bounced back each and every time… so who knows what the future holds when it comes to the debatable bubble that is Bitcoin?