However there are;
3 reasons why bitcoin’s surge may not be a bubble.
- Bitcoin has an actual purpose: Cryptocurrencies are not like Beanie Babies, because they have utility value — namely, they facilitate international payments for goods and services.
.The Economist notes that bitcoin BTCUSD, -2.25% aspires to be a means of exchange like the dollar DXY, -0.55% , rather than just a form of digital gold GLD, +0.74% .
Chinese investors have used bitcoin to get money out of that country and are seen as helping drive its price higher.
- It’s a WYSIWYG market, not a scam: The primary cryptocurrencies are based on transparent rules and are not a scam, says Smith, whose take served as our Need to Know column’s call of the day.
It’s a “what you see is what you get" marker.
That means both the buyer and seller know all there is to know about the exchange, Smith says. That’s not true of rackets like offloading a package of toxic mortgages as a mortgage-backed security.
- Everyone hasn’t piled in: The pool of potential buyers is thousands of times larger than the pool of present owners.
Yes, that does sound a bit like the “cash on the sidelines” line that stock-market bulls like to use. But hear it out.
“Bubbles occur when everyone and their sister is trading/buying into a ‘hot’ market,” “While a few of my global correspondents own/use the primary cryptocurrencies, and a few speculate in the pool of hundreds of lesser cryptocurrencies, I know of only one friend/relative/colleague/neighbor who owns cryptocurrency.”
Many big institutional investors could start adding bitcoin as a core holding.