Bitcoin and Cryptocurrency: Bubble or Not?
Some people consider cryptocurrencies like Bitcoin to be a speculative bubble and tend to compare it to the internet bubble (also known as the dot com bubble) that marked the 90s.
During the internet bubble, many companies listed their shares on the stock market, so they made an IPO and this generated spectacular fundraising from investors. It turns out that at times these companies have done nothing special with this money or have proven nothing about their future plans. By knowing this fact and if you have been following the news of cryptocurrencies in recent years, you may say to yourself that the same thing seems to be happening in this market and you may not be far from the truth but nobody really knows for sure.
Investors are so drawn to money, as soon as they see a so-called ICO (Initial Coin Offering) listed on an exchange and are able to buy it, they rush for the tokens and people are pouring their money into it. This insane greed is what allows certain companies to raise funds sometimes spectacular with currencies whose value will then explode. This is the other point in common with the internet bubble of the 90’s.
According to data from the Google Trends tool, it is observed that for the search term “dotcom bubble”, there is a huge peak which is correlated with the sharp rise in Bitcoin in December 2017 when it reached $ 20,000. This shows us that internet users and investors have seen similarities between the potential cryptocurrency bubble and the internet bubble (dotcom), which is reflected in this sharp increase in research on the subject as Bitcoin exploded upwards.
Some analysts believe that the Bitcoin (and crypto-currencies) bubble therefore exploded in mid-December 2017, since the price of the coin corrected to reach a low of $ 6,000. It turns out that since then it has shot up well above this price point reaching all time highs of around $60,000 in the first half of 2021 before crashing back down to a low of $30,000. Depending on when you are reading this course, your best bet is to take a look at the real-time Bitcoin chart to see how the situation has evolved since then.
Recognized investors continue to see Bitcoin and crypto-currencies as a bright future, after all blockchain is revolutionary and could change our lives in many ways, so it’s a safe bet that crypto-currencies will continue. to experience some success but the journey has been a treacherous one so far with wild swings in price.
So has Bitcoin and crypto-currencies seen their bubbles explode or are their prices simply correcting in line with their performance? In the long term, will these markets correct or continue to gain in value? Only time will tell.