Is the most famous cryptocurrency Bitcoin a Speculative Bubble?

Bitcoin bubble
Bitcoin is still by far the most popular cryptocurrency in the world. It is also the largest in terms of market value, which continues to draw a lot of interest. However, not all of the attention is favorable. Is Bitcoin a bubble?

What makes Bitcoin so popular?

Did you know there are over 4000 cryptocurrencies in the world? So, what makes Bitcoin so popular when there are literally thousands of cryptocurrencies to pick from? Here’s a rundown of some of the reasons:

One fact about decentralized blockchain technology is that users’ anonymity is preserved. Another advantage is data openness.

Then there are the lightning-fast Bitcoin transactions. All of these factors contribute to its appeal.

Its accessibility: Because it was the first cryptocurrency to be released, it is accepted by the vast majority of trading platforms.

Its protocols: Programming like Bitcoin halving has contributed to its popularity.

Before we address the question, “Is Bitcoin a Bubble?” let’s define a bubble.

To begin, let us define a financial bubble. Charles Kindleberger defines a financial bubble. He defines it as “an increase in asset values that cannot be explained by its fundamentals.” Essentially, it is an economic cycle characterized by a quick growth in market value. This is especially true when it comes to asset prices.

Consider this: a rise in asset values produces a bubble, which is fueled by irrational market activity. The assets are frequently traded at prices much in excess of their real value. In other words, the price does not correspond to the fundamentals of the item.

So, is Bitcoin a speculative bubble?

There is obviously a lot of conjecture about Bitcoin. The massive price increase in 2017 and subsequent fall in 2018 demonstrated this. So, is Bitcoin a fad? The answer is complicated because it depends on how you look at it. This is a tough question to answer since, while it may exhibit indicators of a bubble, it has not burst.
It has not fully failed. As a result, we can’t be certain.

Bitcoin has been around since 2009, and while there have been some significant price gains, it has not reached the heights of some of the previous booms. The truth is that Bitcoin fundamentals improve year after year, thanks to the efforts of hundreds of contributors and brilliant open-source developers who work tirelessly to strengthen the Bitcoin ecosystem.

The fact is that Bitcoin is still in its early stages. It is a nascent asset class that may see multiple price bubbles as it matures. When it comes to Bitcoin, it’s critical that you avoid the FOMO instinct and invest wisely.
We always recommend following the golden rule. That is, you should never invest more money than you can afford to lose.