EPeak Daily

No, The Bitcoin “Bubble” Isn’t Bursting

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Bitcoin doomsayers have once again called it too early.

Article by Ricardo Esteves NewsBTC | edited by CryptoClarified

Bank of America Corp., the second-largest bank in the US by total assets, announced that “the greatest bubble in history is popping”. Somehow, it doesn’t seem that way. The price of Bitcoin has broken above the $8,000 mark and has steadily collected gains over the weekend. Yes, this could be just a simple short squeeze before the very imminent demise of the cryptocurrency market, but what has history taught us?

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See: The Real Reason Bankers Are Afraid of Bitcoin & Cryptocurrency

The Bitcoin Bubble Burst Déjà Vu

Bitcoin is one of “the greatest bubbles in history”, Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, wrote in a note Sunday. Hartnett leads a research group that concluded the Bitcoin bubble has already burst. Equipped with an X (Years from Peak) and Y (Multiple from starting level) chart, the group says the cryptocurrency peaked in December, when it reached $20,000, and is on a ‘post-peak’ mode.

To back up the ‘solid reasoning’, Hartnett’s team compared its price behavior to other famous bubbles in history: the 1929 crash, Gold, South Sea Company, Mississipi Company, and of course, the Tulip Mania in 17th century Netherlands. The much-disputed race for the biggest speculative bubble in history clearly has a winner: Bitcoin. The digital currency was able to nearly multiply its value by 60 at its peak. That is 150% the value of tulips at their ‘best’.

That was an interesting chart, but does it serve as evidence that Bitcoin is a bubble and that it has burst? Of course not. I guess they claim the bubble has burst because Bitcoin has fallen over 65 percent from its December peak.

But how seriously should we take such light analysis? Any differently than the Economist story in 2011? Or the CNN story in 2013? Or the CNN story in 2015?

“BITCOIN, briefly the world’s favorite cryptocurrency, is in trouble. It plummeted from a peak of around $33 per unit in June to just $2.51”, said the Economist on a piece called “The Bursting of The Bitcoin Bubble” in 2011.

CNN’s “Bitcoin Bubble May Have Burst”, dated 2013, makes a similar point. “The price of Bitcoins has plunged more than 70% in the past two days, sparking a rush of activity that overwhelmed trading platforms and suggested the bubble in the virtual currency has burst”, it said.

In 2015, the news agency proved it didn’t learn the first time: “Bitcoin lost more than 60% of its value last year. The digital currency has already plunged another 30% in the first few days of 2015 — and that includes a 30% rebound on Thursday!”, said CNN in its article entitled “Will Bitcoin Ever Rebound?”.

I just picked these three pieces at random. The list could go on and on. This reminds me of David Meade, a Christian numerologist who claims the end of days is on April 23, 2018. Who knows, maybe this time he’s right.

Let Us not Forget That All of the Major Media Sites Were Covering What a great opportunity Bitcoin was when it was trading above 15,000

The fact is, the media sites are clueless. They can add catchy names like “Forbes Crypto” or “CNBC crypto”, post screenshots of coinbase in news reports (facepalm) and attempt to use crypto terms incorrectly like “moon boom” and “HODL.” But it’s like listening to your grandpa talking about Facebook. It’s cute, but they don’t really have a grasp on it.

Bulls On Parade?

Several things are going Bitcoin’s way as of right now. The launch of ETFs allows institutional investors to speculate on cryptocurrencies. Although the demand seems rather low right now, things are gradually improving. With a regulatory body to be formed for these products, things can only improve from here on out.

Speaking of regulation, Bitcoin is still a hot topic among government officials. Any regulatory measure will legitimize the cryptocurrency industry as a whole. Not everyone is in favor of this particular trend, though, but it is a “necessary evil” to take this form of money mainstream in the future.

Currencies other than Bitcoin are still evolving as well. Ethereum is set to undergo some big changes, including a switch to proof-of-stake. Additionally, there are rumors Vitalik Buterin may effectively introduce a hard cap supply for Ether. Ripple is still making inroads in the financial sector as well. Litecoin has seen a few setbacks due to Litepay falling apart, but the currency will bounce back eventually.

The Next Bull Run

The general consensus from the experts- at least the ones that called the sharp drop in Bitcoin prices (and took a lot of flack for suggesting the digital currency could drop 50% or better when it was trading near all time highs) are now calling for the next bull run to resume possibly in the 2nd to 3rd quarter this year. Pantera Capital Management says that Bitcoin has found it’s ultimate low at $6,500 in this bear market predicts Bitcoin will rise to and surpass it’s previous $20,000 price high by the end of the year.

BlockWealth Capital Founder Matt Siebenthal received a lot of flack in December when he mentioned Bitcoin could drop below $7500 while it was trading above $19,000 and euphoria for the digital currency was at an all time high. But the former professional trader and hedge fund manger postponed plans to launch a crypto hedge fund in 2017- citing concerns for valuation and suggesting that new funds rushing to open doors in 2017 exercise caution while awaiting regulatory clarity.

Michael Novogratz, the former macro manager who’s turned into one of the biggest champions of bitcoin, also shelved plans to start his cryptocurrency hedge fund and was one of the first to publicly predict that the digital money could plunge to $8,000 or lower. Novogratz still believes they’ll be a disruptive force in finance and is calling for Bitcoin above 25,000 by year’s end.

Investment tycoon Tim Draper said earlier this week that Bitcoin (BTC) could hit $250,000 by 2022, CNBC Fast Money’s Brian Kelly has supported this prediction in a CNBC interview from yesterday, April 13. In response to a question about Draper’s high prediction, Kelly responded that although “it sounds crazy,” when one considers that BTC already had a 4,000 percent return over two years, a 3,000 percent return over four years could be a “continuation of the trend we’ve seen.”

Kelly continues by noting that an increase of institutionalized money into the crypto sphere — Rockefeller’s VC arm, a Goldman Sachs executive, and Soros Fund Management — may dampen the volatility of cryptocurrencies, making them easier to use as actual currencies, and making it take four years (rather than two) to reach Draper’s suggested 2022 price point.

There is a wall of institutional money awaiting regulatory clarity. When that levy breaks, you’re going to want to own as much Bitcoin as you possibly can.

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No, The Bitcoin “Bubble” Isn’t Bursting was originally published in Breaking Crypto News on Medium, where people are continuing the conversation by highlighting and responding to this story.



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