So where exactly are we in the bubble?

[jubalix]

Regarding Bubbles, here is an interesting article:

https://qz.com/1067557/robert-shiller-wrote-the-book-on-bubbles-he-says-the-best-example-right-now-is-bitcoin/

Yale economics professor Robert Shiller won the Nobel prize for his work on bubbles. He wrote a seminal book on speculative manias, Irrational Exuberance, a deep analysis of the dramas over the centuries when otherwise sane people drove prices for tulips, stocks, and houses to inexplicable heights.

Shiller developed some of the tools that are considered vital for taking a sober look at markets. He helped create indexes for measuring real estate prices and his stock market valuation indicator, the cyclically adjusted price-earnings ratio, or CAPE ratio, is seen as one of the best forecasting models for stock returns.

As Shiller sees it, “big things happen if someone invents the right story and promulgates it.” Quartz spoke with him about some of the frothiest assets today, from bitcoin to tech stocks.

Quartz: What are the best examples now of irrational exuberance or speculative bubbles?

Shiller: The best example right now is bitcoin. And I think that has to do with the motivating quality of the bitcoin story. And I’ve seen it in my students at Yale. You start talking about bitcoin and they’re excited! And I think, what’s so exciting? You have to think like humanities people. What is this bitcoin story?

It starts with Satoshi Nakamoto—remember him? The mysterious figure who may or may not be real. He’s never been found. That has a nice mystery quality to it. And then he has this clever idea about encryption and blockchain and public ledgers, and somehow the idea is so powerful that governments can’t even stop it. You can’t regulate this. It kind of fits in with the angst of this time in history.

If you look at the third edition of Irrational Exuberance, I’m arguing that there’s a fundamental deep angst of our digitization and computers, that people wonder what their place is in this new world. What’s it going to be like in 10, 20, or 30 years, and will I have a job? Will I have anything?

Somehow bitcoin fits into that and it gives a sense of empowerment: I understand what’s happening! I can speculate and I can be rich from understanding this! That kind of is a solution to the fundamental angst.

So I’m trying to deconstruct the bitcoin story. Big things happen if someone invents the right story and promulgates it.

People trying to looks at crpto tech / BTC as a stock or any preceding fin instrument. Wow no idea. Here a hint look at the uptake of new tech graphs......you don't see the mobile phone bubble "pop", or the connecting to the internet "pop", sure they get displaced eg VHS, CD, USB stick etc, but its not a "pop" or a bubble.

Get back to me when MR. Shiller gets a grip on the byzantene generals problem and the implications of its solutions, for government and society, banks etc. Tulips could not function as government, contracts, be teleported, server as a permanent ledger etc etc etc.

[SimonJones]

We are not in a bubble - the rocket has not even launched. The crypto space is still so small that it's almost insignificant.

[btcney]

We are not in a bubble - the rocket has not even launched. The crypto space is still so small that it's almost insignificant.

Long term i would definitely agree with you - bitcoin is still a relatively new project, and mass adoption is still very very far away. Long term wise we are probably not even achieving 1% of the potential that bitcoin can do to help decentralize and stabilize the world economy.

But short term we haven't gained that many users but yet the prices for bitcoin has risen by 400% since the start of the year.

I don't think that this is sustainable growth, and this short term bubble could pop very soon. I think that we are currently near mania, or even bull trap. Not sure where exactly though.

[Bitcoinaire]

We are not in a bubble - the rocket has not even launched. The crypto space is still so small that it's almost insignificant.

Long term i would definitely agree with you - bitcoin is still a relatively new project, and mass adoption is still very very far away. Long term wise we are probably not even achieving 1% of the potential that bitcoin can do to help decentralize and stabilize the world economy.

But short term we haven't gained that many users but yet the prices for bitcoin has risen by 400% since the start of the year.

I don't think that this is sustainable growth, and this short term bubble could pop very soon. I think that we are currently near mania, or even bull trap. Not sure where exactly though.

How many user have we gained this year?

[alyssa85]

Regarding Bubbles, here is an interesting article:

https://qz.com/1067557/robert-shiller-wrote-the-book-on-bubbles-he-says-the-best-example-right-now-is-bitcoin/

Yale economics professor Robert Shiller won the Nobel prize for his work on bubbles. He wrote a seminal book on speculative manias, Irrational Exuberance, a deep analysis of the dramas over the centuries when otherwise sane people drove prices for tulips, stocks, and houses to inexplicable heights.

Shiller developed some of the tools that are considered vital for taking a sober look at markets. He helped create indexes for measuring real estate prices and his stock market valuation indicator, the cyclically adjusted price-earnings ratio, or CAPE ratio, is seen as one of the best forecasting models for stock returns.

As Shiller sees it, “big things happen if someone invents the right story and promulgates it.” Quartz spoke with him about some of the frothiest assets today, from bitcoin to tech stocks.

Quartz: What are the best examples now of irrational exuberance or speculative bubbles?

Shiller: The best example right now is bitcoin. And I think that has to do with the motivating quality of the bitcoin story. And I’ve seen it in my students at Yale. You start talking about bitcoin and they’re excited! And I think, what’s so exciting? You have to think like humanities people. What is this bitcoin story?

It starts with Satoshi Nakamoto—remember him? The mysterious figure who may or may not be real. He’s never been found. That has a nice mystery quality to it. And then he has this clever idea about encryption and blockchain and public ledgers, and somehow the idea is so powerful that governments can’t even stop it. You can’t regulate this. It kind of fits in with the angst of this time in history.

If you look at the third edition of Irrational Exuberance, I’m arguing that there’s a fundamental deep angst of our digitization and computers, that people wonder what their place is in this new world. What’s it going to be like in 10, 20, or 30 years, and will I have a job? Will I have anything?

Somehow bitcoin fits into that and it gives a sense of empowerment: I understand what’s happening! I can speculate and I can be rich from understanding this! That kind of is a solution to the fundamental angst.

So I’m trying to deconstruct the bitcoin story. Big things happen if someone invents the right story and promulgates it.

People trying to looks at crpto tech / BTC as a stock or any preceding fin instrument. Wow no idea. Here a hint look at the uptake of new tech graphs......you don't see the mobile phone bubble "pop", or the connecting to the internet "pop", sure they get displaced eg VHS, CD, USB stick etc, but its not a "pop" or a bubble.

Get back to me when MR. Shiller gets a grip on the byzantene generals problem and the implications of its solutions, for government and society, banks etc. Tulips could not function as government, contracts, be teleported, server as a permanent ledger etc etc etc.

The uptake of bitcoin ISN'T like mobile phones or the internet though is it.

It's been stuck on about 250,000 - 300,000 transactions a day for a year. Whereas the phone adoption and internet adoption involved the number of users literally doubling every week.

Bitcoin adoption got strangled a couple of years ago by the high fees.

[andrei56]

2010, 2011, 2013 (twice), now...

Bitcoin is almost certainly in a bubble, a short-term one. I think we may be flirting with the Greed phase, but who knows?

Long term, I'm still very bullish - we may still be at "smart money" or the "lunatic fringe" as Andreas Antonopoulos would phrase it, so eloquently the way he does.

In terms of long term investing I think we are some of the earliest investors, bitcoin has not reached anything close to mainstream adoption and I think that is going to take a lot of time, when people finally realize that bitcoin is the next big thing a tremendous amount of money is going to be invested in the market, and when that happens, we are going to take advantage of the opportunity and make a lot of money.

[BitHodler]

In terms of long term investing I think we are some of the earliest investors, bitcoin has not reached anything close to mainstream adoption and I think that is going to take a lot of time, when people finally realize that bitcoin is the next big thing a tremendous amount of money is going to be invested in the market, and when that happens, we are going to take advantage of the opportunity and make a lot of money.

In order to really push this market forward and make current price levels look like peanuts, we have to offer institutions an easy and convenient way of entering the Bitcoin world.

With more and more countries legalizing Bitcoin usage, the day institutions will start pumping hundreds of millions into Bitcoin will come closer and closer ~ proper legislation is a crucial aspect since institutions are tied to strict rules.

If we at some point in the far future also get people to partially ditch gold to buy themselves into Bitcoin, we'll see price levels that in current times are nothing more than a wild fantasy.

[Kriptex]

2010, 2011, 2013 (twice), now...

Bitcoin is almost certainly in a bubble, a short-term one. I think we may be flirting with the Greed phase, but who knows?

Long term, I'm still very bullish - we may still be at "smart money" or the "lunatic fringe" as Andreas Antonopoulos would phrase it, so eloquently the way he does.

In terms of long term investing I think we are some of the earliest investors, bitcoin has not reached anything close to mainstream adoption and I think that is going to take a lot of time, when people finally realize that bitcoin is the next big thing a tremendous amount of money is going to be invested in the market, and when that happens, we are going to take advantage of the opportunity and make a lot of money.

I don't think we're early investors but I also don't think this is not a bubble. The bitcoin exchange markets are stable at least and this makes me happy since I know bitcoin's market price won't de disrupted so much. If we're holders, we'll keep holding until our exit (sell) point.

[orions.belt19]

We are not in a bubble - the rocket has not even launched. The crypto space is still so small that it's almost insignificant.

Long term i would definitely agree with you - bitcoin is still a relatively new project, and mass adoption is still very very far away. Long term wise we are probably not even achieving 1% of the potential that bitcoin can do to help decentralize and stabilize the world economy.

But short term we haven't gained that many users but yet the prices for bitcoin has risen by 400% since the start of the year.

I don't think that this is sustainable growth, and this short term bubble could pop very soon. I think that we are currently near mania, or even bull trap. Not sure where exactly though.

Maybe were in a mania phase, because Bitcoin and cryptocurrency has been slowly been gaining some media attention. Its been featured in social media sites and some celebrities like Mayweather has given it some notice, and I think it has brought some enthusiasm from the public.

I believe that in long term, bitcoin and crypto will remain strong and that it is not a bubble. But perhaps this massive price hike will soon have an end and maybe it would stabilize. I am confident in bitcoin and there's still a long way to go for its progress.

[aeternus]

That's right, we're all in a bubble, but this bubble can continue to continue if it is not punctured. In other words, if it is stable, it will last forever, but if it is affected badly, it can break down at any time.

but i do not think that we are in bubble because i think that the it is the actual  price of bitcoin which has more potential to increase its price.

i also do not think that we are in the bubble, because i think that still there is more potential in the price of bitcoin to increase. i think bitcoin price will even continue increasing and still i consider that it will be a very safe investment if a person will invest money in bitcoin right now, because i have fully trust on bitcoin that its price will continue increasing.

I think the price is going to stay there for quite some time, there are going to be some ups and downs but overall the price is not going to go down as dramatically as some people are expecting and in a few months bitcoin will begin once again a bullish move when the lightning network is ready.

[d5000]

With respect to the current situation of the bubble, I think we're either:
- in the "back to normal" (Bull trap) phase
- or still within "New Paradigm"

So I don't rule out totally a new successful attack on $5000. But what I'm almost sure is that in September we'll have seen the peak of the bubble.

Now some comments:

The uptake of bitcoin ISN'T like mobile phones or the internet though is it.

It's been stuck on about 250,000 - 300,000 transactions a day for a year. Whereas the phone adoption and internet adoption involved the number of users literally doubling every week.

Bitcoin adoption got strangled a couple of years ago by the high fees.

Well, I agree somewhat, but this is more due to the 1 MB block size limit and not because of the fees alone. If blocks could have been larger, they probably would contain more transactions

The problem I see is that very few real-world services have started to accepted Bitcoin in the last 2-3 years. That basically means that Bitcoin is still in a speculative phase. And so all extreme growth is ... bubblish.

And I also disagree with @jubalix in another point: "Bitcoin" is not a technology like "the Internet". "Bitcoin" is one instance of a technology called "cryptocurrency". So even if it's a "protocol", at the end it's more similar to a standard business/company, because it's so easy to create "almost-equal" protocols ("altcoins").

[andrei56]

2010, 2011, 2013 (twice), now...

Bitcoin is almost certainly in a bubble, a short-term one. I think we may be flirting with the Greed phase, but who knows?

Long term, I'm still very bullish - we may still be at "smart money" or the "lunatic fringe" as Andreas Antonopoulos would phrase it, so eloquently the way he does.

In terms of long term investing I think we are some of the earliest investors, bitcoin has not reached anything close to mainstream adoption and I think that is going to take a lot of time, when people finally realize that bitcoin is the next big thing a tremendous amount of money is going to be invested in the market, and when that happens, we are going to take advantage of the opportunity and make a lot of money.

I don't think we're early investors but I also don't think this is not a bubble. The bitcoin exchange markets are stable at least and this makes me happy since I know bitcoin's market price won't de disrupted so much. If we're holders, we'll keep holding until our exit (sell) point.

We are early investors, if we assume that at the end bitcoin is going to be used by 1 billion people around the world and that the current amount of users of bitcoin is 10 million then that means that bitcoin has only reached 1% of its maximum capacity, if being among the first 1% of users is not an early investor then I do not know what that is.

[BITSPANISH]

2010, 2011, 2013 (twice), now...

Bitcoin is almost certainly in a bubble, a short-term one. I think we may be flirting with the Greed phase, but who knows?

Long term, I'm still very bullish - we may still be at "smart money" or the "lunatic fringe" as Andreas Antonopoulos would phrase it, so eloquently the way he does.

In terms of long term investing I think we are some of the earliest investors, bitcoin has not reached anything close to mainstream adoption and I think that is going to take a lot of time, when people finally realize that bitcoin is the next big thing a tremendous amount of money is going to be invested in the market, and when that happens, we are going to take advantage of the opportunity and make a lot of money.

In my opinion, we are investors in development phase of Bitcoin, because the earliest investors are people had bought Bitcoin in 2009-2011 or people can buy Bitcoin when the price still around under $250/BTC.

[Reid]

2010, 2011, 2013 (twice), now...

Bitcoin is almost certainly in a bubble, a short-term one. I think we may be flirting with the Greed phase, but who knows?

Long term, I'm still very bullish - we may still be at "smart money" or the "lunatic fringe" as Andreas Antonopoulos would phrase it, so eloquently the way he does.

In terms of long term investing I think we are some of the earliest investors, bitcoin has not reached anything close to mainstream adoption and I think that is going to take a lot of time, when people finally realize that bitcoin is the next big thing a tremendous amount of money is going to be invested in the market, and when that happens, we are going to take advantage of the opportunity and make a lot of money.

In my opinion, we are investors in development phase of Bitcoin, because the earliest investors are people had bought Bitcoin in 2009-2011 or people can buy Bitcoin when the price still around under $250/BTC.

That is true. Bitcoin is so young that many are inflicting so much definition about it and also that could damage it and yet here we are. Well, because of its high value it is more targeted now with different FUD's. Now, it became normal that many users dont even care what FUD's they make. I am certain it aint a bubble and if it is, it should have popped already because of the surge. But it aint, and it is a currency.

[CoinClarity]

I'm making a bold proclamation that bubble territory exists above the $5000 mark, simply because at that price level it starts to lose some of its intrinsic value as it becomes too expensive of an option for the vast majority of potential users.

Too expensive not only in price (regardless of the fundamentals, its a psychological turnoff for those looking to invest or purchase some for other reasons), but in transaction fees as well. For example, 250 satoshis/byte is a lot more expensive today than it was 3 months ago.

https://bitinfocharts.com/comparison/bitcoin-transactionfees.html

Regardless of SegWit, the overall trend in transaction fees is upward in terms of both dollars and satoshis. At $5 per transaction or higher bitcoin frequently becomes a more expensive option than corporate services such as PayPal and Western Union.

Moral of the story: I wouldn't start investing in bitcoin per se any time soon, but what do I know, I'm just a Noob.

[d5000]

I'm making a bold proclamation that bubble territory exists above the $5000 mark, simply because at that price level it starts to lose some of its intrinsic value as it becomes too expensive of an option for the vast majority of potential users.

Would you say the same if the standard unit was the satoshi (in a $5000 Bitcoin, a satoshi is worth 0.005 USD cents, or 0.00005 USD)?

As I said already, I think the bubble territory started much before (at 1800-2500), but because of other reasons (too fast increase, no real world adoption that would justify that sharp increase).

Too expensive not only in price (regardless of the fundamentals, its a psychological turnoff for those looking to invest or purchase some for other reasons), but in transaction fees as well. For example, 250 satoshis/byte is a lot more expensive today than it was 3 months ago.

https://bitinfocharts.com/comparison/bitcoin-transactionfees.html

Strange graph. Since August, if I'm in a hurry, I don't use more than 50-60 sat/B (about $0.50 for a 192-byte transaction) and it normally gets confirmed in the first block. If I'm not in a hurry 20 sat/B are more than enough. The congestion is much less than in the first six months of 2016, so I really don't know who's driving that high the average transaction fee ...

Segwit should drive the fees even lower. Segwit transactions are still not much used, that's why it had limited impact on block size/fees until now.

[Cerbera]

Crypto is still in it's infancy. I don't think that the bubble has even started to inflate yet.

[CoinClarity]

Would you say the same if the standard unit was the satoshi (in a $5000 Bitcoin, a satoshi is worth 0.005 USD cents, or 0.00005 USD)?

As I said already, I think the bubble territory started much before (at 1800-2500), but because of other reasons (too fast increase, no real world adoption that would justify that sharp increase).

Sorry I don't quite understand what you're driving at. I do think the standard unit is the satoshi.

Massive sell-offs can't quite seem to make the price break below $4k. That's why I think BTC will remain between $4k and $5k until something new happens.

[d5000]

Would you say the same if the standard unit was the satoshi (in a $5000 Bitcoin, a satoshi is worth 0.005 USD cents, or 0.00005 USD)? [...]

Sorry I don't quite understand what you're driving at. I do think the standard unit is the satoshi.

In my opinion, it's irrelevant if "the Bitcoin" is at $5000, $1000 or $500000. You can buy any fraction of it, because the unit "Bitcoin" is defined in a totally arbitrary way as 100000000 satoshi. That's why I don't think there is a point where a "bubble territory begins" where people would stop to buy because it's "too expensive". If there was a psychological barrier, then most likely it was at $1000 - I don't get why it should be $5000.

Massive sell-offs can't quite seem to make the price break below $4k. That's why I think BTC will remain between $4k and $5k until something new happens.

Well, now we broke through the $4K barrier. I think bulls will try to ride the next bounce to break $4000 again, but it won't be sustainable - for a couple of days at most, and probably it won't cross $4300.

[wurth]

That's right, we're all in a bubble, but this bubble can continue to continue if it is not punctured. In other words, if it is stable, it will last forever, but if it is affected badly, it can break down at any time.

but i do not think that we are in bubble because i think that the it is the actual  price of bitcoin which has more potential to increase its price.

i also do not think that we are in the bubble, because i think that still there is more potential in the price of bitcoin to increase. i think bitcoin price will even continue increasing and still i consider that it will be a very safe investment if a person will invest money in bitcoin right now, because i have fully trust on bitcoin that its price will continue increasing.

I think the price is going to stay there for quite some time, there are going to be some ups and downs but overall the price is not going to go down as dramatically as some people are expecting and in a few months bitcoin will begin once again a bullish move when the lightning network is ready.

Do you think good news like lighning network can helps Bitcoin recover? Hm... it seems quite right, but I do not think it enough for makes the price of Bitcoin recover after falls down to low price by FUD.