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Bitcoin is often compared to Tulipmania – the world’s first financial bubble – in the Netherlands in the 17th century. During this time, the contract prices for tulips reached their monumental peak and then drastically collapsed in a week, causing tulip holders to declare bankruptcy. This is generally the model that defines all financial bubbles. Assets, both good and bad, drastically appreciate in value way beyond their worth because of investor psychology or the hype surrounding an asset. Once the pool dries up, and there is no longer a demand for the asset, those who remain in possession of it begin a hysterical sell-off for less than a fraction of the money they paid.
Bitcoin is considered the most successful cryptocurrency in the world and was the world’s pioneer in blockchain-based cryptocurrencies. It was launched in 2009 and cost next to nothing at the time before it began to fluctuate. As a variety of events, such as the Mt. Gox default, the Silk Road collapse, the market crash, a broader consumer market, and others unfolded, Bitcoin’s price surged.
There has been plenty of speculation about the burst of the crypto bubble, and for the most part, it’s all come true. The difference is crypto keeps resurfacing. It was only three years ago when Bitcoin got its sixty seconds of the spotlight and soared to an all-time high value of $19,783 but then slowly began its decline to $3,441 by January 2019. It is now November 2020, and Bitcoin has just dashed past $15,000 taking its market capitalization at $74 billion, Netflix is valued at $72 billion, and American Express at $78 billion.
1: The interest in cryptocurrency grows as the dollar weakens. Many professionals, such as JP Morgan, believe that Bitcoin may even surpass gold in popularity.
2: Venezuela had been struggling with an economic crisis for years when the COVID-19 pandemic showed its ugly face and practically wiped out the country’s economy. In an attempt to fence off massive inflation, Venezuelans have increased their use of Bitcoin.
3: Iran has also recently adopted Bitcoin for international trade as the US sanctions intensified, the COVID 19 pandemic rose, and the threat of a global economic crisis grew closer.
4: Bitcoin continued its surge, reaching a whopping $15,000 on the post-election day. The demand for cryptocurrency is further fuelled by the hyperpartisan divide, mistrust in the government, and election turbulence in the United States.
5: Many companies, such as PayPal and Square, accept Bitcoin as an operable payment method, while the Swiss Gazprombank recently launched Bitcoin trading.
Bitcoin’s incredible performance boosted the value of other cryptocurrencies like Ethereum, which is currently trading at $450. Investors and governments deem Bitcoin a great inflation protector, but will the Millennials follow this hype – perhaps out of a fear of missing out? Only time will tell. Many things hang in the air right now, but one thing that we can say with certainty is that everybody can speculate plenty about crypto, but nobody puts crypto in the corner.
Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. UR Trade Fix Ltd accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The information presented does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Past performance does not constitute a reliable indicator of future results and future forecasts do not constitute a reliable indicator of future performance.