Economists and cryptocurrency experts are at odds with each other over a single, troubling question.
Is the bitcoin bubble about to burst?
On December 2017, just before Christmas, bitcoin reached an all-time high of $19000. It seemed unstoppable. Professional investors were fawning over its potential; the general consensus being bitcoin would never topple.
The next month, in January 2018, bitcoin value saw a declivity and hurtled to half its value. By March, bitcoin was somewhere around $8000. It still hasn’t recovered.
The bitcoin mania has been compared to famous previous bubble bursts in history. Michael Hartnett, investment strategist at Bank of America Merrill Lynch lists a few; the Tulip mania, south sea company, Mississippi Company, the 1929 crash, and so on. Out of all these bitcoin undoubtedly takes the trophy.
According to a post in by Allianz Global investors, bitcoin is the textbook example of a bubble about to burst. It checks all the boxes.
To state a few: its trading volume has witnessed a five-fold increase, it is not regulated, it eliminates the need of an intermediately third party like the bank, and it provides a trading gateway for nefarious practices.
Much light as already been shed over the flaws of bitcoin – it does not produce a stream of income, has no value, and so on.
Is this really it for bitcoin?
Saxo Bank analyst Kay Van-Petersen thinks otherwise. In an interview with CNBC, he said bitcoin could reach $100,000 in 2018. He thinks the potential is not limited to just bitcoin – other cryptocurrencies could take the lead too.
The Saxo Bank analyst is also quite positive on other fronts of the cryptocurrency. He speculates more firms will get involved with the cryptocurrency market; it will be gradual, but it will happen.
Regarding the current downward spiral of bitcoin, the analyst believes bitcoin is “kind of building a foundation, then will re-rate a bit higher.”
Kay Van-Petersen is not alone in his belief. CEO of a Canadian cryptocurrency exchange says bitcoin is not the mother of all bubbles. He believes bitcoin has to just mature, and the whiplash-like price fluctuations and high volatility are just “the market correcting itself.”
This is not the first time doomsday predictions for cryptocurrency have been made – and chances are it will not be the last time either. If past record is any indication of its volatile nature, bitcoin will continue to turn the tables for investors and experts alike.
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