Back to the list

Bitcoin reaches even more dramatic heights, some analysts start to think it’s a bubble

Yesterday evening Bitcoin, the most known and popular cryptocurrency, continued its growth trend and has reached a record value of 4,225 USD, according to the data from Coinmarketcap. The financial and tech analysts of the world are now expressing different views on this matter. Most analysts believe that this cryptocurrency has proven its worth after that chain segregation, but some warn that this current hype of investors might gradually fall.

For example, CNBC in its latest reports gives many positive factors that explain such growth, even telling that the recent raise of tensions between the U.S. and North Korea (to be fair, this factor is not the first in the list). However, the same news agency provides the opinion of Dennis Gartman, the commodities expert, who says in the interview that he doesn’t believe yet that Bitcoin can fully replace fiat money – due to these very fluctuations: “How can you buy Starbucks with bitcoin when the price is going to fluctuate as [rapidly] as it has?"

Although Dennis Gartman here is just expressing his doubts about Bitcoin as a payment tool, some even already call it a “bubble” – a slang term traditionally used to describe an overrated asset which price will fall drastically later. Rory Cellan-Jones, the BBC tech correspondent, compared the current hype around Bitcoin to an old Dutch historical event when at some point tulips became very valuable and then the price of these flowers dropped dramatically: “Yes, tulip bulbs are now selling for $4000 and we were told that was a bubble when they hit $100..” This tweet is itself a response to a discussion initiated by Alex Hern, tech correspondent in Guardian, who took a photo of a cryptocurrency advertisement, stressed that he is not thrilled with the overall hype and prepares for a huge price drop: “This is nuts, when's the crash?”

Such skepticism, while it may look too cynical, is confirmed by numerous historical events. We can remember the dotcom crash that happened almost 20 years ago, when different corporations invested too much money in a new concept of websites. There’s also a story that might be fictional, but has some sense in its core: just before the Great Depression, one of very prosperous American businessmen (some sources tell it was J. P. Morgan) had a chat with a shoe shiner who told he plans to invest in some assets and asked which are most beneficial right now. This businessman later went to his company and ordered to sell all assets, because if even a shoe shiner thinks the market has a potential, this market is on a verge of price decrease.

Back to the list