Has the Bitcoin Bubble Fully Popped?

Yes – it seems that the price of Bitcoin formed a bubble which recently burst at a full level. It doesn’t take a scientist to understand that BTC drew a big fat bubble driven by speculation – you just have to watch the chart:

Jamie Dimon, CEO of JPMorgan was right when he claimed that Bitcoin was a bubble, though he went even further and said it was a fraud – which, at least from my viewpoint, is not true. The fact that the cryptocurrency market formed a bubble and then crashed doesn’t mean the industry is not genuine.

For example, let’s take a look at this chart:

This is the performance of the NASDAQ index, which focuses on US technological companies. Since the 2000s, the index has been heavily dependent on Internet firms, as everything related to the Internet has been a megatrend especially in earlier days, which attracted many investors who didn’t have a clue about how it works – something similar with the current approach to blockchain and Bitcoin.

If you want to understand how people perceived the internet at that time, feel free to watch this short video:

Now if you replace the term “Internet” with “Bitcoin” in that video, you’ll get my point. Today, there is a lot of talk about blockchain, but few people understand its key principles. Anyway, the fear to miss the opportunity is too big, so everyone is becoming an investor.

As you can see in the NASDAQ chart, most of the internet companies collapsed – the tech sector formed a bubble which burst in 2000. That event had a major effect on the entire economy of the US, as many other sectors suffered a lot, with the S&P 500 and Dow Jones indexes showing similar bearish patterns.

However, does it mean that the Internet is a fraud because the sector related to it crashed? No – I think we don’t have to go deeper to explain the importance of the Internet in today’s world. Thus, Bitcoin is not a fraud as well, as Dimon suggested last year. It’s just that many speculators jumped in the cryptocurrency bandwagon without fully grasping the technology behind Bitcoin and the concept of digital currency. It doesn’t matter how the crash was triggered – the important thing is that it happened, which might be a sign that the crypto space is getting mature.

Is this bubble burst the end of Bitcoin? Well, let’s go back to NASDAQ and see how it performed after the dot-com crisis.

Oops – that crash seems to be irrelevant today as the NASDAQ index updated its record high again and again, with Internet giants like Google, Amazon or Facebook dominating the world.

The cryptocurrency space might have the same future, as it will attract more big players from Wall Street. Early in 2019, ICE, the parent company of the largest stock exchange in the world – NYSE – plans to launch the Bakkt – a crypto futures trading platform. Many institutional investors are ready to enter the market and buy Bitcoin at today’s discount prices – so it’s not the end of Bitcoin, even though it might drop below $2,000 for a while.

And don’t believe those who say it’s not a bubble – it was a classic one.

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