Will the bubble burst?

[telemaco]

oh by the way, i have been checking almost non stop twitter for "bitcoin" and always appear a tweet from "The economist" saying that the graph looks like a bubble. Seems there are many players out there that are quite worried of bitcoin.

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[wingding]

If you fancy yourself a speculator then prepare to periodically loose your shirt.  

Ha ha - I love the concept of Bitcoin AND I am a speculator - tried to buy when it was down in $5 - but my bank could only transfer yen to jp - and I kinda forgot the idea for 8 months. So much for laziness!

I read about digital currency with facination in my studying time (the same time Gopher browser was the only decent browser)  LOL
I lost so much money on speculation before - but what the hack, this time its for a good idea also! I get a new shirt.

[thundersky]

In the long run a $60 bitcoin might not be a bubble at all.  More and more businesses might accept it, drug money might be poured into.  Money from hedge funds might drive up the price just like investment firms are driving up housing prices in place hit hard by the real estate bubble.

However a glitch here, a bug there and a virus there can send prices tumbling. 

Perhaps a bit coin might be priced where gold is in the near future.

[koobie]

All bubbles eventually burst.  They usually revert back to wherever the bubble started and at about the same time interval that the bubble grew.  Pretty symmetrical.

[crash_override]

Demand is increasing rapidly.. hash rate is increasing rapidly.. and yet the market cap is still relatively small, and a very, very small percentage of the population is in the game. I would not call the current valuation a "bubble" at all.

If BTC were a public company, most people wouldn't even consider investing. That's because a $600M market cap is miniscule in size, and would be likely to offer substantial risk. Of course this type of comparison isn't totally fair, since BTC is much more than just something to invest in -- it is a currency with unique and highly-desirable properties. There will certainly be some corrections along the way, but I do think the chances of a massive sell-off down to single digits is just out of the question (barring some unforeseen catastrophe). Could we see $30s or $40s again? Absolutely. There will be volatility. However, long-term prospects look very rosey, indeed.

[Manticore]

Demand is increasing rapidly.. hash rate is increasing rapidly.. and yet the market cap is still relatively small, and a very, very small percentage of the population is in the game. I would not call the current valuation a "bubble" at all.

If BTC were a public company, most people wouldn't even consider investing. That's because a $600M market cap is miniscule in size, and would be likely to offer substantial risk. Of course this type of comparison isn't totally fair, since BTC is much more than just something to invest in -- it is a currency with unique and highly-desirable properties. There will certainly be some corrections along the way, but I do think the chances of a massive sell-off down to single digits is just out of the question (barring some unforeseen catastrophe). Could we see $30s or $40s again? Absolutely. There will be volatility. However, long-term prospects look very rosey, indeed.

I agree. However, there are many good small cap stocks that have sub $600MM market caps.

People are buying into the potential of "a currency with unique and highly-desirable properties"; it has not yet been widely adopted so it has not yet become a useable currency for most people. I think merchants will adopt it much more quickly than consumers because BTC is becoming du jour.

If BTC achieves what it is designed to achieve, the long-term outlook is beyond amazing.....it's unprecedented.

[bitsil]

The bubble isn't in BTC at all.  It's in fiat currencies.  Helicopters have been dropping paper all over the world for years now.  This is the bubble.  As paper purchasing power continues to erode, BTC holds/gains value against paper.  Since there is no underlying paper market (derivatives) in BTC (unlike gold), it cannot be manipulated and suppressed.  As everything else goes to shit, BTC remains the shining beacon of light.  And demand will continue for many years to come.  Sooner or later, noone will be able buy a whole BTC.  Only a fraction.  And the early adopters will be wholly rewarded for assuming most of the risks. 

Facebook, a fad website with a $100B market value?  Bubble.

[BTCvFiat]

I've been buying gold and silver for years and have heard of them being in a bubble many times. They go up and down, but go up overall. I think bitcoins will also have ups and downs. I'm sure there will be some that think a bubble has popped when the price adjusts down, before the next up, but it's down it's the best time to buy!

As you would know from experience; "buy the dip." 

[Lucifer]

I agree with bitsil. It's the fiat currencies that are losing value in relation to bitcoin.

[PimpBot5000]

I agree with bitsil. It's the fiat currencies that are losing value in relation to bitcoin.

Um... that might be taking it a bit far to say that the fiat currencies are crashing against Bitcoin, but right now BTC seems more solid than anything Fiat by far.

[Gator-hex]

All bubbles burst. Know the signs... I would say we're in the "Enthusiasm" or "Greed" stages.

[PimpBot5000]

All bubbles burst. Know the signs... I would say we're in the "Enthusiasm" or "Greed" stages.

http://www.bigtrends.com/wp-content/uploads/2012/01/Bubble-Phases.png

To be fair, you could say the same about the New York Stock Exchange right now.

[emmanuel645]

I don't think that the bubble will burst because of all the new users and business but if it burst it won't go under 30 dollars.

[Manticore]

These cycles are part of the inherent flaws of capitalism; nothing is immune. The thing that will unmask this temporary over-exuberance, if that is indeed what is going on, is the fact that Bitcoin will take much longer for the consumer to adopt than everyone is anticipating. With such a small market cap, the new merchants that are accepting BTC won't see much additional business. Can it exist only as primarily a speculatory alternative asset if it is not being widely used for its primary purpose? If so, for how long.....

Because BTC is a longer term play, it will probably be subject to several of these up-down cycles (probably doubtful to get washed out like after the first cycle, barring the unforeseen). It's so unique in that it has characteristics of so many different types of assets. It's part tech stock (an incredible tech story), part currency, part commodity....it's even like a piece of fine art in the sense that the technology can be perfectly copied and replicated (LTC, PPC, etc) but only the original holds high value.

The network effect and popularity are ultimately giving BTC this value.....it has brand appeal, which is also quite interesting. A rose by any other name....

[bitsil]

We're still in the smart money phase of your chart.  The fact that I can buy more than 1 BTC is evidence.  Only 10M in circulation.  These little blips are nothing.  Accumulate and wait.  Buy some goods and services now and then on the way up, spread the joy.  Positively contribute to the community.  What happens when 1 out of 10 people in the worlds largest 10 cities, want in on bitcoin?  25M people chasing 10M bitcoins.  Just to get into the community.  Do you think the price of one btc will be $50/per?  Do you think the bitcoin economy will be $500m?  Try something like 100B, or 200x what it is today.  Can't know for sure.  What if, what if, what if.  1 out of 10 people in the world's top 100 cities?  1 Trillion economy.  2000x what it is today.  Amazing to think about.

Talk of a bubble this early on is absurd.

  

[Pheenixm]

If BFL turns out to be vaporware, the bubble will burst like no other

[nobbynobbynoob]

If BFL turns out to be vaporware, the bubble will burst like no other

I had this thought too. I'm holding/watching the market right now - and I'm a big believer in buy-and-hold strategy when it comes to honest money like gold or bitcoin.

[derm]

I dont think we will see the area below $50 again.

[deathcode]

Do you read the news? Did you know the bitcoin reward was halved in December?
Did you know that bitpay is getting a lot of money from venture capitalists?
Did you know the government has created guidelines for bitcoin?
Did you know Cyprus is in the toilet? And so is Spain, New Zealand, Greece, Argentina, and others...?
Did you know about ASIC and the higher difficulty rates we will be experiencing soon?
There's no bubble, welcome to the real value of bitcoin, and this is just the beginning.

[jordan.dev]

At this point it just seems like panic buying