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Author Topic: What is analoguous to the repetitive bubbles in bitcoin price?  (Read 376 times)
talks_cheep
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May 29, 2017, 11:15:07 PM
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I'm trying to better understand the nature of these price bubbles in bitcoin. What other human inventions have the same bubble making qualities prevalent in bitcoin? I had seen bitcoin compared to cellphone adoption and even the spread of internet. But they (cellphone and internet) are different in many ways in how they behave, and also bitcoin has strong monetary qualities while cell phones and internet not so much intrinsically anyway. So, what things can you think of that resemble bitcoin's bubblicious nature? And why?

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May 29, 2017, 11:21:11 PM
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i think the monetary aspect wipes out any comparison to any other type of adoption. it requires education and risk in the way other tech adoption never asked for.

and the strength of alts have now broken any comparisons to bitcoin's past behavior too. there've been incredible alt bubbles when bitcoin was doing absolutely nothing. the latest one is even more epic and bitcoin has been strong but acting in a very different way.

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ktabb
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May 30, 2017, 02:17:44 AM
 #3

I'm trying to better understand the nature of these price bubbles in bitcoin. What other human inventions have the same bubble making qualities prevalent in bitcoin? I had seen bitcoin compared to cellphone adoption and even the spread of internet. But they (cellphone and internet) are different in many ways in how they behave, and also bitcoin has strong monetary qualities while cell phones and internet not so much intrinsically anyway. So, what things can you think of that resemble bitcoin's bubblicious nature? And why?

I think cellphone adoption and the internet are horrible analogies because neither of them is a bubble. The concept of a bubble doesn't really apply to them.

Bitcoin bubbles are really the same as every financial bubble we see. They are the same as the dot com bubble, the housing bubble, the bubbles we see in individual stocks all the time, etc. Bitcoin's bubble behavior is not unique... and furthermore I would argue that it has absolutely nothing to do with bitcoin itself and everything to do with investor psychology. Assets don't create bubbles, investors do. It does happen to be true that bitcoin attracts a lot of investors who are the type of people who buy into manias easily and help create bubbles, but it is still investors creating the bubble and not bitcoin itself.

Bottom line, bubbles are seen everywhere in financial markets, and bitcoin's bubble behavior is commonly seen all over the place.

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May 30, 2017, 11:24:33 AM
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This is an interesting question. If you compare the Bitcoin chart to the GOOGL share price, they look totally different. Google looks more like a straight line and makes no sense on a log view.

On the other hand, the APPL chart does look like the Bitcoin chart - it has a few big booms and busts and looks a bit logarithmic. Why is that the case? I have no clue.
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May 30, 2017, 12:03:28 PM
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This is an interesting question. If you compare the Bitcoin chart to the GOOGL share price, they look totally different. Google looks more like a straight line and makes no sense on a log view.

On the other hand, the APPL chart does look like the Bitcoin chart - it has a few big booms and busts and looks a bit logarithmic. Why is that the case? I have no clue.

I think AAPL is like that because it kind of has a cult following, like Bitcoin. The kind of investors who invest in things like AAPL and Bitcoin are the kind of investors who easily jump on board in buying and selling frenzys, trying to make a ton of profit very quickly. This kind of behavior creates bubbles. I wouldn't be surpris d if a chart of TSLA looks a lot like Bitcoin and AAPL in 10 or so years.

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May 30, 2017, 12:17:25 PM
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This is an interesting question. If you compare the Bitcoin chart to the GOOGL share price, they look totally different. Google looks more like a straight line and makes no sense on a log view.

On the other hand, the APPL chart does look like the Bitcoin chart - it has a few big booms and busts and looks a bit logarithmic. Why is that the case? I have no clue.

it actually isn't that much different.
when the investment is great, these things grow fast > enter a bubble > bubble bursts > correction > rise again.
these markets usually attract a certain number of investors. it is not like bitcoin from all around the world, each day fresh money coming in and be able to buy literary any amount.

so on a smaller scale i believe we can consider them the same.




what i would like to see is their orderbooks. i believe that can be a very good comparison with bitcoin markets and their orderbook size.
for example how much money does it take to buy these shares and cause a 5% rise. how much for -5% drop














 

 

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VC George
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May 31, 2017, 05:54:23 PM
 #7

I'm trying to better understand the nature of these price bubbles in bitcoin. What other human inventions have the same bubble making qualities prevalent in bitcoin? I had seen bitcoin compared to cellphone adoption and even the spread of internet. But they (cellphone and internet) are different in many ways in how they behave, and also bitcoin has strong monetary qualities while cell phones and internet not so much intrinsically anyway. So, what things can you think of that resemble bitcoin's bubblicious nature? And why?

I don't think there is a reasonably similar vehicle (Bitcoin is a "bubble" vehicle in this logical concept), even other cryptos don't work similar to Bitcoin. And above all you can't call it a ponzi scheme since the price depends 100% at the selling/buying ration each moment. Given that, Bitcoin cannot be considered a bubble vehicle since keeping the price stable even at 200k per coin doesn't cost anything.
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