Investing in digital assets like bitcoin comes with many risks and is highly speculative. Thus, some investors say bitcoin is a bubble that will burst anytime from now.
“A bubble is only a bubble when it pops. Early investors only see it going up. We could see it go down very quickly as well.” - Kevin Webach
A bubble is when the price of an asset deviates from its “cores” which are the characteristics of an asset that investors use to value it. Example of it are as follows: income that can be obtained from a country’s economy, a rent from property, a stock over time, or a company’s cash flow. However, bitcoin does not yield profits (like shares) or rent (like property). Thus, it really it is really hard to tell what the true value of bitcoin should be. You can't depend on fundamental analysis to know the true of bitcoin, as there is nothing to know. Buying bitcoin is pure speculation, there's no investing happening.
Investing in bitcoin indeed comes with many risks because prices are overwhelmingly volatile. The cause of recent price hikes is that people still keep on buying more and more bitcoin. Kindly note that any increase in bitcoin demand surely translates into an increase in its value since the amount of bitcoin in circulation is limited. This potentially leads to a bubble formation that will result to major losses when it bursts. In the end, this is truly uncharted territory. So investors, beware!
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What do you think? Is Bitcoin really a bubble?
I agree that we can't really depend on fundamental analysis yet for cryptocurrencies. This doesn't mean we don't have fundamentals data, just that we don't have the experience or track record yet for sufficient confidence in what is being analyzed or how to rate it.
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What you're saying is true. :)
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It's only a bubble for as long as cryptocurrency is a bubble. At the moment BTC is still the measuring stick for every other cryptocurrency and it's generally what you trade within exchanges... you just don't move it around. It could possibly be overvalued, though.
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BTC is indeed the frontrunner. I agree that it's overvalued too.
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Im new in platform but slowy learning about bitcoin and cryptocurrency. This help me to have more idea about how it works but also leave questions to my mind.
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I'm also new and getting the hang of it. :)
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can't really tell as I'm no expert when it comes to this matter. 😂 do you happen to have bitcoin investments?
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No investments yet. Still familiarizing myself with crypto stuff as I'm no expert as well. Haha!
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