Popping the Bitcoin Bubble: 5 reasons economists might be wrong
A CNBC survey this week found that 80% of Wall Street economists believe current Bitcoin prices are a bubble. Eight-zero percent. We can’t even get 4 out of 5 dentists to recommend flossing. Another Wall Street Journal study found 51 out of 53 economists surveyed thought bitcoin's price was an unsustainable bubble. Clearly, Bitcoin has a remarkable ability to bring the world’s economists together -- and just in time for Christmas! This news scares me a bit. I don’t want to be the guy buying up beach front investment property in Florida in 2007. Or Beanie Babbies in... well, pretty much ever. But there are at least 5 reasons I view these Bitcoin obituaries with skepticism. 1) Bitcoin threatens the role of traditional finance If I hopped in my time machine destined for 2010 and polled 53 taxi drivers I’m sure I wouldn’t find many bullish on Uber. I’d also be using a time machine for the stupidest purpose since Back to the Future 3. Most investment strategies are born out of financial institutions. These folks like being informed. Consider how far the Duke brothers went to obtain the 1983 orange crop forecast. Cryptocurrency is rooted in the tech community, not finance. I doubt many fund managers ever considered investing in Bitcoin, at least not until recently. If my only job was to invest money for other people and I missed the biggest investment opportunity of the century, I would probably be a bit bitter. 2) If everyone thinks its a bubble, is it really a bubble? The housing market in 2007 was a can’t-lose investment. Lie on your loan application. Scoop up a condo before the unit is finished being built Sell your condo several months later for 50% profit Everybody wins! Nobody seemed to think that housing demand could ever fall. Conversely, most people buying Bitcoin are very aware of some degree of risk. Corrections happen near weekly. And, clearly, the professionals have reached a consensus that Bitcoin is overvalued. I’m sure there are some Bitcoin investors who aren’t properly assessing the risk, like this idiot family that sold their home in October to buy in. But overall, people realize Bitcoin isn’t a sure-thing. -- Also, that idiot family just quadrupled their investment in 3 months. 3) People aren’t buying on credit As far as I’m aware, most credit card companies and loan agencies, aren’t going to throw cash at you to buy Bitcoin. In fact, all the exchanges I have worked with require direct bank transfers. The level of effort required to buy Bitcoin is unusually high. It may take someone several days to get verified and several more to fund their account. When you’re forced to think about your investment plans for a few days, you’ll likely make a more thoughtful decision. Both Bitcoin and handguns have a waiting period. 4) Coinbase is adding over 100,000 users a day A couple years ago I couldn’t talk about Bitcoin with anyone, because nobody knew (or cared) what the heck it was. Now, I can’t talk about Bitcoin with anyone because they are all tired of hearing about it! All of this brand awareness is driving a surge in demand. As any good Herbalife salesmen will tell you, “generating demand for your product is key... Now will you please please please buy $5,000 of milkshake mix?” 5) Bitcoin has been declared dead over 200 times BitcoinObituaries.com chronicles Bitcoin’s demise with an endless list of doomsday publications. As we’ve already established, economists really hate Bitcoin, and apparently publishers aren’t too fond of it either. Lots of people have claimed Bitcoin was a ponzi scheme, or unsustainable, or an alien plot to steal our mothers (Maybe that last one was just a movie.). But the blockchain keeps kicking, people keep investing, and publishers and economists keep being wrong. At this point it seems like a lot of writers are just too stubborn to admit that maybe they were wrong. Maybe a global decentralized currency does have a purpose. Maybe an asset can derive value from its users rather than a central authority. And maybe they can borrow my time-machine for a spin. About The Author I'm just a silicon valley marketer who has invested, mined, and spent various cryptocurrencies for the past 6 years.
So I’m definitely new to Bitcoin, but in just the last week or so I’ve seen the value go from like $7500 to $9200. I’m definitely no economist or anything like that but isn’t this like, bubble 101? Can anyone please explain why I should keep holding?
[translated from norwegian] Investment Economist about the bitcoin bubble: - «It can get ugly.»
Article from today in norwegians biggest news corporation. https://www.nrk.no/norge/investeringsokonom-om-bitcoin-bobla_-_-det-kan-bli-stygt-1.13881237 "It has started popping a bit already. If there comes more regulations, as it stands so far, it seems that the cryptocurrencies will fall further." says investment economist Tom Hauglund to NRK. It can get ugly Today there are over 1400 different crypto currencies, ie digital money that is not affiliated with any central bank or government agency. Nobody knows how many Norwegians have invested in crypto currencies, but Nordnet has about 1500 Norwegian customers who trade in bitcoin. On average, these customers are holding NOK 35,000 [4,500 USD] - at a very high risk, according to Hauglund. "I do not dare to wonder what bitcoin can fall to. But if the government now enters and regulates the trade, access to bitcoin and other crypto currencies will fall significantly. What would then be a potential bottom is hard to say, but I fear that it might get bad, he says. On their own initiativ Asked why Nordnet sells trading in crypto currencies, despite the fact that Hauglund warns against this, the investment economist answers this way: "This is a product we offer to customers because the demand is so great. Customers who wish to trade these products must take a test where they cross that they understand the risk. This is not something we recommend customers to do - this is something they have to do on their own initiative." Investment economist Tom Hauglund in Nordnet believes cryptocurrencies will continue to fall in price. Customers who trade in crypto currencies are different types of customers than those who purchase a mutual fund in Nordnet. "These are speculators who would like an alternative to gambling and casino," says Hauglund. Several countries alert regulations Israel has also announced that they will ban trade in the crypto currency until legal regulation is in place. The last month, the Bitcoin value is almost halved, following the news that more countries introduce regulations. South Korea introduces a new system where trade is registered with name and the possibility to track. France and Germany will propose regulations at the G20 meeting in March. "We share the same concerns and share the goal of regulating bitcoin," said France's finance minister Bruno Le Maire at a joint press conference with his German colleague Peter Altmaier last week. Higher risk in other markets Gründer and head of Norway's Bitcoin Association, Stephan Nilsson, scoffs at financial experts who are now considering collapse in the cryptocurrency market. The leader and entrepreneur of Norway's Bitcoin and Blockchain Association is not worried about the fall in value that is occuring now. - After such corrections, the value increases far more than the drop, he thinks. He believe there are bigger bubbles and higher risk in the saturated equity and housing markets. "Bitcoin is nine years old, and since we started, we have seen a pretty real upturn. It rises 100 or 200 percent, and then gets a correction of 30 to 50 percent. After a decline, we see that the price continues to go further, says Nilsson. "Today, only a promille of the world's population knows bitcoin and crypto currencies, so we have a huge market ahead of us," he added. Be careful Nilsson nevertheless believes that you should not go in with money you can not afford to lose. "You must know what you do and be careful, as in all other investments you make," he says.
Second, Shiller's comments suggest that, while bitcoin could be a bubble, perhaps it will behave in a way that is different from other historic bubbles. The cryptocurrency phenomenon has been ... Oct 21st 2011. by C.F. BONN. BITCOIN, briefly the world's favorite cryptocurrency, is in trouble. It plummeted from a peak of around $33 per unit in June to just $2.51. Bitcoin biggest bubble in history, says economist who predicted 2008 crash This article is more than 2 years old Nouriel Roubini calls cryptocurrency the ‘mother of all bubbles’ as it falls ... Bitcoin and other cryptocurrencies. Any illusions that holders might have had that the limited supply of bitcoin would maintain its value should have been dispelled by the arrival of other competing crypto-currencies. If the US Treasury perversely decided to limit the supply of dollar bills, then Americans would start using Canadian dollars, or euros, or IOUs from Berkshire Hathaway, or just ... As Charles Kindleberger, a historian of bubbles, wrote There is nothing so disturbing to one's wellbeing and judgment as to see a friend get rich People are not buying Bitcoin because they intend ...
"Robert Shiller, 2013 Nobel Prize winner in Economics, and an expert in the nature of market excesses, has come down on bitcoin and said that the tremendous ... Nouriel Roubini: All crypto currencies are a scam. The blockchain technology is overrated. Bitcoin Is the Mother of All Bubbles, its fundamental value is ZERO. ~ Video category: Bitcoin sceptic, In the above video, I set some parameters that I use to define investment bubbles, and super bubbles. I then discuss my view on Bitcoin and where it falls among my definitions. The other video I ... In this video we look at a theory put forward by Nobel prize economists on what could be a potential cause for a bitcoin crash. The book I discuss is called Animal Spirits. The biggest bubble in human history. This video is unavailable. Watch Queue Queue