bitcoin IS in a bubble

[pooya87]

people always think only if price goes up then it goes into a bubble. but they forget that that is not the only type of bubble that exists. of course that is the most common thing and also a popular concept which has a popular name.

a bubble is irrational and uncontrolled exhilaration which leads to irrational investment which pushes the price above intrinsic value of the asset.

but people forget about the less common term "reverse bubbles" which occur similarly to bubbles but instead of people focusing on the positive and buying, they are focusing on the negative and selling irrationally. the result is price being pushed below the intrinsic value of the asset.

right now bitcoin is in a Reverse Bubble and just like a bubble, it needs bursting before the market can become healthy again.

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[GeoRW]

But, where are the buyers? At 6000$ the volume was ridiculously low, no one was buying, so it crashed. Now we have much better trade volumes at 4000$, but how long will it last till people who think this is cheap will stop buying and wait for price to rise or decline again. These are not the people who will push the price up. Once this money dries up, we're going back to low volumes and possible decline again. Next halving is still far away. Bitcoin needs some positive news to reverse this trend and may easily go down with some negatives.
I think 4000$ is still great for bitcoin, In Jan 2017 it was less then 1000$, when I was buying my stash it was less then 2$. Some people are still clouded by the last year's hype.

[exstasie]

but people forget about the less common term "reverse bubbles" which occur similarly to bubbles but instead of people focusing on the positive and buying, they are focusing on the negative and selling irrationally. the result is price being pushed below the intrinsic value of the asset.

Markets are irrational. That's their nature.

What's this about intrinsic value? As I understand it, Bitcoin has no intrinsic value. It's only worth what the next person is willing to pay.

right now bitcoin is in a Reverse Bubble and just like a bubble, it needs bursting before the market can become healthy again.

We probably need to reach extreme lows in sentiment before reversal and shake out the overleveraged bulls and weak hands. I don't think that's happened yet.

[Tytanowy Janusz]

yep. Market is irractional longer than ractional investor remains solvent. I think that we are far from beeing in reverse bubble. Im more like GeoRW. 6k holded that long because we have smart whales that simply stops selling close to support rather than big stopping volume appear and blocked price. Now at 4k $ range we have stopping volume that created new short term support. We will see if it will hold.

[pooya87]

But, where are the buyers? At 6000$ the volume was ridiculously low, no one was buying, so it crashed.

not really!
actually volume has been pretty high at $6k range considering price was stable and day trading was impossible. you shouldn't really compare volume during a stable price time with volume of a highly volatile time like when price was rising 100% in one month! obviously when price is rising or falling fast and big, there will be a huge volume compared to when it is moving less than 5% in a day!

besides price doesn't crash because nobody is buying. price crashes when a large amount suddenly is sold on the market.

Now we have much better trade volumes at 4000$,

actually if you compare the current volume (that price is nearly as stable as $6k+) you can see volume is less than that time. and i suppose it is because of that uncertainty that was created because of the dump.


none of this changes the fact that we are still in a big reverse bubble though.

[mu_enrico]

IMO bubble is just a simple explanation of the market cycle. January 2018 was the time when the bubble started to deflate. And now we are waiting for the next bubble bull-run.

The reverse bubble is just an accumulation period in the bear market (near the bottom).

[davis196]

This type of reverse bubble can be called price implosion as well.If the price goes up rapidly,there's a price explosion.If it goes down,it's an implosion.The market is collapsing from the outside to the inside,due to the lack of fresh money/new buyers.Anyway,the crypto market is always in a constant bubble.

[talkbitcoin]

This type of reverse bubble can be called price implosion as well.If the price goes up rapidly,there's a price explosion.If it goes down,it's an implosion.The market is collapsing from the outside to the inside,due to the lack of fresh money/new buyers.Anyway,the crypto market is always in a constant bubble.

price never goes down because of "lack of fresh money" which is also known as demand. it goes down when there is more supply or in other words when there is more sells happening.
and that is what has been happening so far, a huge amount of bitcoin has been getting sold on exchanges which has been the reason for this "implosion" or "reverse bubble".

[GreatBug]

This type of reverse bubble can be called price implosion as well.If the price goes up rapidly,there's a price explosion.If it goes down,it's an implosion.The market is collapsing from the outside to the inside,due to the lack of fresh money/new buyers.Anyway,the crypto market is always in a constant bubble.

price never goes down because of "lack of fresh money" which is also known as demand. it goes down when there is more supply or in other words when there is more sells happening.
and that is what has been happening so far, a huge amount of bitcoin has been getting sold on exchanges which has been the reason for this "implosion" or "reverse bubble".

At the moment you are talking about the reasons for the price drop, but the reason for the bubble is "the impact of fresh money". At the moment we are already at the bottom and the bear market is ending (or it is over), so everyone thinks about "fresh money" as something that is needed to start a new bubble.

[BitHodler]

price never goes down because of "lack of fresh money" which is also known as demand. it goes down when there is more supply or in other words when there is more sells happening.

You are very much contradicting yourself here.

Fresh money entering the market = demand.
Stagnation in fresh money entering the market = low demand.

If there is less demand after a significant increase, it automatically translates into there being more supply available, therefore the price goes down. It's basic economics that we're talking about.

The fresh money entering the market was what allowed the price to keep increasing last year, till the entire market ran out of steam and the CME news was sold. Or do you think fresh money has no function at all in this space?

[NeuroticFish]

the result is price being pushed below the intrinsic value of the asset.

Most of us don't know the real / correct "acquisition" price for Bitcoin (i.e. the minimum price to mine it). Most of the trader wannabes know even less.
That would be a starting point.

Then there are the news telling the Bitcoin is dying (I'm not sure how can be dying a technology, a software actively developed and successfully used every day), a lot of influencers trying to convince people to avoid Bitcoin or even sell at a loss. Many don't understand market cycles, many don't understand that as long as they don't sell they didn't lose anything.

So most don't understand what could be the intrinsic value of Bitcoin.

And I'll get back to my early days in crypto. Back then almost a mantra was that 1 DOGE = 1 DOGE. Yes, 1 Bitcoin = 1 Bitcoin in the same way 1 USD = 1 USD. Bitcoin is a coin, a currency, no matter how bad many (including us) advertise it as an asset. And this makes the intrinsic value of Bitcoin subject of what the "free market" dictates. Just the "free market" in this case is unregulated hence the price can get dictated by whales, bots, exchanges and #@^^ knows who else.

So we don't know enough to properly tell what's happening and when will this end. But "this" should be part of a cycle, the history has already shown that to us. So, sooner or later, the upward part of the market cycle should also start.

[cluit]

That is where the big money comes in and makes the all difference for themselves. The difference between small investor and a big investor is that a small investor can lose 1 thousand dollars of their profit and that would be a huge deal and could even keep them at night and really ruin their mood for a long long time however for a big investor they can lose a million dollars and call that daily swings. Hence, when you see these type of big moves know that the big investor is trying to gather your small investor money to their portfolio, they are not fighting big whale vs big whale, they are getting together and killing the smaller fish together, they know there is enough money to be made from this for all of them if they act together. Hence bitcoin is being irrational looking but behind it, it all makes sense to them.

[pooya87]

don't be too literal here. intrinsic value is not something that you can formulate and measure to say this is the intrinsic value so higher than it is bubble and lower than it is reverse bubble.
and again similar to bubbles, a reverse bubble can not be seen for sure until it pops. for example when price was $20k we had no way of saying it was a bubble, we could make a guess but it only became a bubble after it burst.
the current situation is very similar, the price has gone down unrealistically and that makes it a good guess to say we are in a reverse bubble.

[pptIox]

Reverse Bubble？ 
What you mean is that the bitcoin is like a spring, sometimes it will be stretched excessively, and sometimes it will be over-compressed, and now it is being over-compressed?
I am a crypto newbie, can I understand like this?

[NeuroticFish]

don't be too literal here. intrinsic value is not something that you can formulate and measure to say this is the intrinsic value so higher than it is bubble and lower than it is reverse bubble.
and again similar to bubbles, a reverse bubble can not be seen for sure until it pops.

All right then. Then we're on the same page.

What you mean is that the bitcoin is like a spring

No, this is not about Bitcoin. It's about Bitcoin price. And the prices and the markets seem to love cycles (up, and down and up again) or even bubbles (when the cycles "stretch" or "compress" much more than they should). So yes, you can see them somewhat like a spring.

[exstasie]

price never goes down because of "lack of fresh money" which is also known as demand. it goes down when there is more supply or in other words when there is more sells happening.

It's either one. "Supply and demand" is an equation with two variables.

If demand is strong enough, any amount of selling can be absorbed and price won't fall. If supply is strong enough, any amount of bids can be sold through and price won't sustain.

You should assume there is always some supply on the market (miners, investors exiting the market, users buying goods via payment processors). Since price isn't $0, we should therefore assume there is always some fresh money holding prices up as well.

and that is what has been happening so far, a huge amount of bitcoin has been getting sold on exchanges which has been the reason for this "implosion" or "reverse bubble".

Another way to put it: demand was very weak, so an increase in supply crashed the price.

[timerland]

people always think only if price goes up then it goes into a bubble. but they forget that that is not the only type of bubble that exists. of course that is the most common thing and also a popular concept which has a popular name.

a bubble is irrational and uncontrolled exhilaration which leads to irrational investment which pushes the price above intrinsic value of the asset.

but people forget about the less common term "reverse bubbles" which occur similarly to bubbles but instead of people focusing on the positive and buying, they are focusing on the negative and selling irrationally. the result is price being pushed below the intrinsic value of the asset.

right now bitcoin is in a Reverse Bubble and just like a bubble, it needs bursting before the market can become healthy again.

I think that a lot of people had really unrealistic expectations of the market last year. The growth was clearly way above the normal long term growth rate of bitcoin, which should be close to how many adopters bitcoin has got. Thus, it's quite normal to have a correction after that full on bull market where prices continuously dip, as we saw in 2014.

In a sense, what we are in right now is a "reverse bubble". I don't know if you coined that term, but it's pretty accurate.

Investors are capitulating and panicking more than they need to, and following the panic selling herd irrationally. As a result, this drives prices further down and leads to more investors panicking. It's quite natural to have this kind of behavior from investors in such bearish market conditions. Of course, it also means that it is a good point for buying as people are over-selling, and I think that there is still long term demand for BTC.

[thecodebear]

But, where are the buyers? At 6000$ the volume was ridiculously low, no one was buying, so it crashed. Now we have much better trade volumes at 4000$, but how long will it last till people who think this is cheap will stop buying and wait for price to rise or decline again. These are not the people who will push the price up. Once this money dries up, we're going back to low volumes and possible decline again. Next halving is still far away. Bitcoin needs some positive news to reverse this trend and may easily go down with some negatives.
I think 4000$ is still great for bitcoin, In Jan 2017 it was less then 1000$, when I was buying my stash it was less then 2$. Some people are still clouded by the last year's hype.

It didn't crash because volume was low. It crashed because of the bitcoin cash hard fork/hashwar/split which caused the whole market to go into fits of panic selling. Did you notice how the crash happened the day after hard fork?
At 6000s volume was low because the price stabilized and you can't trade in a market that doesn't move.

There are plenty of buyers right now, but there's also tons of panic sellers after the drop. which is why the price is moving up and down right now.

[thecodebear]

people always think only if price goes up then it goes into a bubble. but they forget that that is not the only type of bubble that exists. of course that is the most common thing and also a popular concept which has a popular name.

a bubble is irrational and uncontrolled exhilaration which leads to irrational investment which pushes the price above intrinsic value of the asset.

but people forget about the less common term "reverse bubbles" which occur similarly to bubbles but instead of people focusing on the positive and buying, they are focusing on the negative and selling irrationally. the result is price being pushed below the intrinsic value of the asset.

right now bitcoin is in a Reverse Bubble and just like a bubble, it needs bursting before the market can become healthy again.

I think a fair market price for bitcoin was the ~6500 that it was stabilizing at for a couple months before the BCH split chaos caused the crash, so yeah i'd say the price is depressed right now. Don't think I'd call it a reverse bubble, but if the market were to keep panic selling from here down to 2000s or 1000s then yes that'd be extreme I think you could call that a reverse bubble.

[pooya87]

In a sense, what we are in right now is a "reverse bubble". I don't know if you coined that term, but it's pretty accurate.

the term has been around but it is not used commonly. maybe once or twice for other markets like gold once.

I think a fair market price for bitcoin was the ~6500 that it was stabilizing at for a couple months before the BCH split chaos caused the crash, so yeah i'd say the price is depressed right now. Don't think I'd call it a reverse bubble, but if the market were to keep panic selling from here down to 2000s or 1000s then yes that'd be extreme I think you could call that a reverse bubble.

the drop that we had to $3500 and now $3300 is a 50% drop from the price you say it was "fair price for bitcoin" and a 50% drop can not be considered normal in my opinion if you consider $6k+ the bottom which is why in my opinion it is a reverse bubble. going any lower will only make it bigger.