The Bitcoin Bubble Will Turn Into Mania Before It Bursts

[alyssa85]

https://www.forbes.com/sites/panosmourdoukoutas/2017/06/22/the-bitcoin-bubble-will-turn-into-mania-before-it-bursts/

Every asset bubble is different, and can be easily confused with healthy bull markets. But they all follow a certain pattern. They begin with ‘investor hype’ over a popular theme – an emerging industry or an exotic product that promises to change the world and make many people rich in the process.

Somewhere down the road Wall Street develops the vehicles that make broad investor participation in this theme easier, like a mutual fund or an ETF—turning investor hype into market contagion, and pushing the price of the underlying assets ever higher.

Then comes easy money by accommodative central banks to provide ‘the air’ -- financing for the bubble to grow bigger and bigger. Bold predictions by market gurus and talk in the mass and social media create buzz that help prices double or even quadruple in a matter of days, even hours—turning market contagion into mania. Investing in this theme reaches a cascade, as no investor wants to be left behind.

Finally, the bubble bursts, as early investors have already cashed out, and there are no more investors to join the party.

Apparently, the ongoing run up in Bitcoin and other digital currencies has most of the elements of a bubble. It’s an exotic asset that comes with big advantages—a better hedge against global uncertainties than conventional hedges like gold; a convenient medium of payment around the globe; and a limited supply--21 million.

Meanwhile, there’s investor hype. More and more investors are becoming familiar with the digital currency, and can use investment trusts like GBTC to conveniently participate in the market.

Adding to the hype is an ultra-low interest rate environment (which has lowered the cost of holding all these four-digit trading Bitcoins).

But there’s one thing still missing to turn the bubble into mania: a broad participation beyond the “pioneers” and the “early adopters,” to “early majority--” along the Rogers curve.

That’s when the demand for Bitcoin reaches a cascade and turns into mania, as a critical mass of investors rush to buy “hot” Bitcoins for the promise they hold -- rather than for the fundamentals they display.

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[panju1]

This might well be true, but it is very difficult to time the market.
How do you time the market? If Bitcoin is rising rapidly, people may be tempted to book profits even before it reaches 'mania' level.
On the other hand, you might sit on it for too long and the bubble might burst....

[Fortify]

You could easily argue that it's current price is the "mania" before the bubble bursts. It has increased over 100% since the start of the year and it did the same thing during last year. I'd love to see it keep going up, but many people get too greedy and keep buying at the top of the market - then get crushed when it drops.

[Denker]

You could easily argue that it's current price is the "mania" before the bubble bursts. It has increased over 100% since the start of the year and it did the same thing during last year. I'd love to see it keep going up, but many people get too greedy and keep buying at the top of the market - then get crushed when it drops.

100% growth in Bitcoin is no bubble!!
Check the previous bubbles (2011,2012,2013)!
Then you know what growth in Bitcoin is usual to speak about a bubble!
If we reach $5000 in the next 2 months I will agree with being in a bubble which sooner or later is going to pop.

[HeRetiK]

That's the fun part. If right now, with current valuations, we still haven't reached the mania phase... then how far will we go? Maybe... this time it's different™

[1Referee]

Anything coming from forbes, cnbc, bloomberg, etc, should be taken with a huge load of salt. It were exactly these media sources that were spreading the exact same gibberish years ago. It's basically just them slightly rephrasing their articles to make it look somewhat unique and authentic, but overall, it's all the same. I accept it if someone with actual understanding of this market seems to be on the bearish side, but these bastards have been proven wrong by the market plenty of times already. They just search for that lucky shot where they can say 'Hey, we told you so, it was a bubble about to burst!'.

[Fortify]

100% growth in Bitcoin is no bubble!!
Check the previous bubbles (2011,2012,2013)!
Then you know what growth in Bitcoin is usual to speak about a bubble!
If we reach $5000 in the next 2 months I will agree with being in a bubble which sooner or later is going to pop.

I'm well aware of the previous growth of bitcoin. There is a big difference between growing 1000% from $10 to $100 per bitcoin, than $750 to $1,500. Too many people get greedy, have unrealistic expectations and will lose money just like when it crashed in 2014 from $1,000 to $400. Good luck with the hype.

[r0ach]

Do the opposite of whatever CNBC says.  If Cramer says Bitcoin is going to $1 million each, dump everything immediately.

[withche.07]

He has good points about bitcoin and its bubbly growth. We are basically sure that bitcoin will slow down and even lose value. But is it in a bubble? If its, how big is that bubble. Noone can be sure of it.
I personally feel that bitcoin price might go down like -%50. But it has opposite chance as well, especially before halving in 2020.

[European Central Bank]

i think the alts have become bitcoin's mania side chain. it's new form of behavior. i don't know how it'll impact on bitcoin.

[Wind_FURY]

You could easily argue that it's current price is the "mania" before the bubble bursts. It has increased over 100% since the start of the year and it did the same thing during last year. I'd love to see it keep going up, but many people get too greedy and keep buying at the top of the market - then get crushed when it drops.

100% growth in Bitcoin is no bubble!!
Check the previous bubbles (2011,2012,2013)!
Then you know what growth in Bitcoin is usual to speak about a bubble!
If we reach $5000 in the next 2 months I will agree with being in a bubble which sooner or later is going to pop.

But how do we really know we are in a bubble if it has not popped yet? What have we learned from the bubbles of the past to find a way to avoid them? Nothing. All we know is bubbles keep forming and then it pops, and the cycle repeats itself once again, leaving the greatest fools holding the bag last.

[N12]

So I have always thought. Until Ethereum stole our mania phase and cut our bubble unduly short.

[600watt]

So I have always thought. Until Ethereum stole our mania phase and cut our bubble unduly short.

sounds plausible to me. never thought about it like this. i hate it. still plausible, though.
blitz, you think it will be multiyear downtrend or is there a chance it moves like it did after $260 peak in 2013?

[N12]

So I have always thought. Until Ethereum stole our mania phase and cut our bubble unduly short.

sounds plausible to me. never thought about it like this. i hate it. still plausible, though.
blitz, you think it will be multiyear downtrend or is there a chance it moves like it did after $260 peak in 2013?

Not sure if it will be a couple months or years. I think it depends on how quickly Ethereum deflates. Bitcoin must become king of crypto again, and I think a bear market wherein Bitcoin falls less quickly than all the alts would allow this to happen.

And yes, I hate it as well. I'm very angry at the irrational miners who allowed the scaling stalemate to continue for so long that it's damaged Bitcoin's valuation severely.

[alyssa85]

i think the alts have become bitcoin's mania side chain. it's new form of behavior. i don't know how it'll impact on bitcoin.

Lots of speculators have poured into alts. But it still isn't a mania levels - people have to start using the alts and bitcoin before we get to that stage.

[European Central Bank]

Lots of speculators have poured into alts. But it still isn't a mania levels - people have to start using the alts and bitcoin before we get to that stage.

since when did actually using anything contribute to mania?

if that is the requirement then we're another 2-3 significant legs up and several years away.

[btc_angela]

I don't think that we have reached the "mania" level yet. The current price of $2600 for me doesn't look like a bubble waiting to be burst. If we double the current price in the next couple of months then I think its a bubble, but for the last months of so the price increase looks like natural to me. Plus we are not even adopted globally, hence there is no mania.

[deisik]

i think the alts have become bitcoin's mania side chain. it's new form of behavior. i don't know how it'll impact on bitcoin

In fact, the impact is already known

There were quite a few coins already that first got massively pumped and later heavily dumped (then basically left for dead). And Bitcoin in all of these cases played the same role as gold is playing in respect to fiat currencies. So when a mania for some altcoin is over, people (those who didn't lose all after the crash phase of the bubble life cycle, obviously) move their monetary wealth to Bitcoin. Though that doesn't of course mean that Bitcoin is like real gold, it can still crash like altcoins crash from time to time

[batang_bitcoin]

Do the opposite of whatever CNBC says.  If Cramer says Bitcoin is going to $1 million each, dump everything immediately.

For real? So I have been fooled by those good articles that coming out. Well it's sort of attracting new investors to come in to bitcoin. But when it comes to bubble, I don't believe that we are in a bubble. This is a legit growth of bitcoin as new countries stated their adoption and legalization about bitcoin and it's transactions.

[ImHash]

I can't tell if the article is saying good things about bitcoin or bad things? whether I should cry or laugh? but I'm ready to become a nymphomaniac