Since its creation in 2009, Bitcoin has observed significant recognition for which it can now be called the biggest bubble in the world’s financial history. The bitcoin bubble supersedes the famous event in Holland, tulip mania which occurred in the 1600s, to become the talk of the town for the last few years.
Rewind a few years, when you might have thought of investing some funds in this new form of currency. In the initial phases, Bitcoin’s price was sky-high which made the cryptocurrencies a unique and curious financial element. Since the digital currency could not be hacked or counterfeited easily its value is worth more than other traditional currencies.
When Bitcoin was created, it wasn’t the only form of cryptocurrency that was in the market although it was the most discussed at that time. The public at large started to think that this digital currency would be a hit since its acceptability was large among interested people.
Through the years, Bitcoin has encountered several ups and downs and many data found on its trading rates show the cryptocurrency’s fluctuation in momentum. The question now is will the Bitcoin bubble burst shortly!
The Ups and downs of Bitcoin
Bitcoin’s massive rise has been compared with previous bubbles such as the (previously mentioned) tulip mania, by several economists. The 17th-century tulip mania bubble and the dot-com bubble in the late 1990s have been compared with the Bitcoin bubble to study the cryptocurrency’s fate.
The purpose behind Bitcoin’s popularity is to secure virtual currencies that might help close the income inequality gap instead of increasing it. Tech sector bubbles in the late 90s had a direct link with the economy, thus they were prone to bursting.
The bursting of the Bitcoin bubble, if so happens, would not consume the total value of Bitcoin since it has fewer links with the broader economy. Irrespective of its severity the Bitcoin bubble can burst, according to bitcoin buyer.
The price of the world’s largest virtual coin has climbed to a recorded value of $64,800 before planting over the weekend. The year 2021 has seen cryptocurrencies such as Bitcoin trade at fluctuating price rates and possibly the Bitcoin bubble can burst. Economists have given reasons behind this phenomenon based on the pattern of economic bursts.
Economic bursts and the Bitcoin bubble
When predicting the Bitcoin bubble burst the stages of economic burst come in handy.
- Firstly for all economic bursts to happen it has to go through a period of stagnant and thereafter a steady growth.
For the cryptocurrency Bitcoin, this fluctuating period started from its creation in 2009 and remained until early 2017. This was particularly the time when crypto enthusiasts began wondering whether the Bitcoin bubble would burst or not.
- Secondly, economic bursts thereafter, are characterized by a period of irrationality where everybody is in a frenzy to make some easy profit when things are taking place without considering that events might go the opposite direction fast.
This is particularly in regards to Bitcoin’s economic value in 2017 when the value of Bitcoin dropped enormously. This sort of price oscillation impacts the economy and makes it vulnerable to crashing.
- Thirdly the economy crashes. No sooner does the economy crash, eventually, every investor tries escaping the phenomenon still not realizing the gravity of the crash. Bitcoin is now susceptible to this eventual state and this has been the scenario since the beginning of 2018.
Bitcoin has had its share of popularity and downfalls. On one hand, it has now been accepted as a staple cryptocurrency while on the other Bitcoin has suffered tough backlashes as supporters now re-evaluate the coin’s usefulness and value.
Conclusion
The cryptocurrency world is indeed an unpredictable one where its value can increase or decrease without any plausible reason. By now, Bitcoin’s history has made it a reputable but volatile currency; thus the Bitcoin bubble burst can be a predictable future.
