Since the beginning of 2017, digital currencies have experienced incredible price increases, many people think that their market value is more than their internal value.
When this happens, bookmakers take the price of an asset to high and unsafe heights, making financial bubbles.
These bubbles are essentially pop, which bring potential waste to those who have bought near the top.
Critical speculative bubbles can also defame an entire market area, which leads to the beer market for a long time as conventional investors have to stay away.
________________________________________________________
Rollercoaster :
The Digital Money Market has witnessed high value growth in the last seven months, since May it is very high.
Some currencies, such as Bitcouine, have seen relatively minor growth. Other currencies, such as NEMs and BitShare, have seen an increase in dramatic value. From the beginning of 2017 till each respective peak, we can see that the cost of bitcoin has increased by 290%
Larger in traditional words, this value is nothing compared to appreciation, which is the experience of NEM (8156 percent) or bithers (11,480 percent). Even Dogkein, news of being "dead" in the industry news, increased during the period up to 1,652 percent.
Such growth is almost certainly uncertain Historically, in a short span of time the massive increase in asset prices has created bubbles that always pop
_____________________________________________________________
Approaches vary :
The rapid increase in the price of cryptokukars called the bubble as many experts and cautioned while investing.
Others argue that due to the principle of bipolar in the market, the digital bubble is impossible. According to George Soros, due to synchronization cognitive and manipulative work, market conditions are "reflexive".
Cognitive function is where economic participants have assessed the facts which they are. On the other hand, to gain an advantage, the spell-functioning function changes a fact (or some facts). Once influenced by the mind that tampering the cognitive brain, neutrality will be "painted" in a different light, it becomes a tampered fact.
Therefore, markets reflect the viewpoint and perspective of participants, not the full scope of economics.
_______________________________________________________
Historic examples :
The first known bubble in history was the Dutch tulip mania as Dutch merchants sold Tulip futures, the prices became very fast from the basic value of the real asset.
Traders did not start buying futures on tulip bulbs, because they wanted bulbs, but because they thought they could sell their contracts for a higher price later on.
Tulip Menia continued until the value of a tulip bulb was higher than the value of a luxury home in Amsterdam. In the future, once new buyers stopped entering the market, the prices of tulips fell to the level of the pre-bubble.
South Sea Bubble is another fascinating example. South Sagar Company was formed in 1711 in the hope of mimicking the success of the British East India Company, in exchange for a large payment to the British treasury, the South Sea Company had exclusive commercial rights with South America. With the hope of being showered with money and promoted on a large scale, the demand of the South Sea Company has increased the contingency levels. Unfortunately, it finally became clear that the company would fail, and the South Sea company's price would fall to zero.
“Eiffel Tower” pattern:
Such bubbles generally deviate rapidly, which traders referred to as the "Eiffel tower" pattern. This pattern is seen when the price of an asset increases rapidly, the number of peaks increases and its basic price increases rapidly.
This formation looks like a two-dimensional picture of the Eiffel Tower. The chart of total market capitalization at Coinmarketcap.com shows that the digital currency sector seems to be sharp and falling rapidly, it took about two months about the exponential growth, so the probability of returning to the mean would take the same length of time. There is no certainty that digital currency bubbles are still popping up, but it probably appears.