Key Post Bitcoin is a clearly identifiable economic bubble

Brendan Burgess said:
A serious institution should not set up an ETF or put money into Bitcoin.
But there is a difference between should not and will not. An institution might be tempted to exploit the vulnerable by launching a BTC ETF. And such an ETF could give a false credibility to BTC.
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To anyone who believes in crypto as a means for the betterment of society, an ETF brings nothing. Your friend Andreas Antonopoulos is not enthused about ETF's.
As regards the reasons for offering one, if people thought that crypto was manipulated and exploited up until now, they have seen nothing. When wall street gets involved fully, that will only get worse. As an example, Bakkt - a physically settled Bitcoin Futures platform - which was supposed to launch in a couple of weeks but now scheduled for January - could be the start of certain problems. Many in the space are looking forward to the launch but Caitlin Long has called them out and they have not fully confirmed that they wont work it such that Bitcoin will be like fractional reserve banking. The beauty of BTC is that there's only ever going to be a max of 21 million. Wall Street treachery could destroy that!

Brendan Burgess said:
This is a very important point. As there are better products out there than BTC, then maybe it's time for BTC to exit stage left and let a better product replace it at a fair price. Maybe one of the stable coins.
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Remains to be seen. They may be better in some ways and not in others. Some have not been fully tested in the way that Bitcoin has. Bitcoin is also leaning on second layer solutions like Lightning Network. Perhaps that will be workable when it builds up momentum.

You speak to volatility re. consideration of using stablecoins. Stablecoins have a role to play right now - no doubt. However, strangely KPMG in a recent report don't see Bitcoin as being fundamentally unstable (presumably they mean over the longer term going forward, not based on past and current experience).

That said, the 'flippening' could happen and another project could rise to the top. We'll have to wait and see.
 
The Black Friday Bitcoin sale continues. Under 4k now. Serious Deal to be had *



* Of course it could fall further
 
Firefly said:
The Black Friday Bitcoin sale continues. Under 4k now. Serious Deal to be had *



* Of course it could fall further
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Yup, about the fifth time in it's history this scale of slide has happened just in case anyone thinks this is the end of it. :)
 
Hi elacs

The problem with something which is irrationally priced is that you can't say that it's different this time.

It may well rise and fall a few times before its inevitable fall to zero.

So, some time, it will be different in that it won't recover. But no one can say whether it's this time, or whether it's the next time.

Brendan
 
Brendan Burgess said:
The problem with something which is irrationally priced is that you can't say that it's different this time.
It may well rise and fall a few times before its inevitable fall to zero.
So, some time, it will be different in that it won't recover. But no one can say whether it's this time, or whether it's the next time.
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I still maintain that whilst Bitcoin could fizzle out, that will only happen should another crypto take up the mantle. i.e. we won't see a situation where there won't be cryptocurrencies in play.
 
tecate said:
I still maintain that whilst Bitcoin could fizzle out, that will only happen should another crypto take up the mantle. i.e. we won't see a situation where there won't be cryptocurrencies in play.
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Hello,

I'm inclined to agree, I also think that there's a place for cryptocurrencies in the future ....but Bitcoin's day has been and gone imho.
 
WolfeTone said:
Bitcoin is trading at around 35% higher than its price was when this topic started some 20months ago.
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Hi Wolfie
It was a bubble then.
It's still a bubble.
It's an odd one in that it inflates quickly and deflates quickly and then reinflates.
But that is what hot air does.

Brendan

3907
 
If there's nothing tangible, there's only one bubble to pop.....a la tulipmania. In cases where there's something tangible there, then that can repeat.

As it stands, it has designed in scarcity. It's immutable, borderless and unconfiscatable. It can be transacted peer to peer anywhere in the world. Whilst it may have huge price volatility, it is far more predictable in terms of systemic volatility. Those are all tangible elements of Bitcoin.
 
The normal characteristics of a bubble are that the price overshoots way more than its inherent, or intrinsic value. The bubble pops leading to a price collapse below its inherent value, undershooting.
Bitcoin peak price was around €16,000, it dropped to around €2500. This price collapse in such a short space of time would, in ordinary observations, for every other assest or good be classified as a bubble bursting.
So it is reasonable to argue that bitcoins bubble did burst, with the sell-off undershooting its inherent value.

If on the other hand it is argued that bitcoin is still a bubble waiting to burst, is there any other bubble in the history of bubbles that has shown such price diversification and still not be classified as having burst?
The recent Irish house price crash is commonly labeled as a bubble bursting, with price falls on average of 50%.
Bitcoin fell 80%+, this was clearly the bubble bursting.
 
WolfeTone said:
So it is reasonable to argue that bitcoins bubble did burst, with the sell-off undershooting its inherent value.
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Eh, no. That is not reasonable at all.

The inherent value is zero and the price will eventually match its inherent value. So it can't undershoot it.

When there is no inherent value, you can use all sorts of sophistry to justify the price. $1? Sure. $100? You must be joking. $20,000? Really funny. So it could rise even further before it eventually goes to zero.

You can't really apply any reason to something which is priced irrationally.

Brendan
 
Brendan Burgess said:
Eh, no. That is not reasonable at all.
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Ok, accepting for the moment that the bitcoin bubble hasnt burst. Is there any other bubble in the history of bubbles that has seen price volatility of 80%+ downward, but subsequently increase 400%+ upward again?
If there isn't, then we are not looking at a typical bubble and by reason it therefore cannot be determined as a bubble in the traditional sense. So if its not a typical traditional bubble, what type of bubble is it?
 
Hi Wolfie

As I have explained before when Shortie raised this question, it does not have to follow an existing pattern.

A bubble is simply something whose price expanded very greatly and very suddenly.

I am sure that the dot.com bubble did not replicate the tulip bubble exactly. But that does not mean that it was not a bubble.


Brendan
 
Hi Brendan

Of course there is no exact replication. But there are similar characteristics. Typically when a bubble bursts on a ponzi fraudulent or wholly irrational scheme the price, once it starts tumbling, returns to zero. It does not reflate. Im certainly not aware of such an instance in financial history.

If the bubble is associated with assets of real value, like housing, the price crashes to a certain point (or zero in extreme circumstances of war and famine) and over a period of time begins to rise again - Irish property market for example. In common parlance across the financial and economic world Ireland had a property bubble which popped and crashed, average 50%.

Bitcoin price fell 80%. Typically, for something so irrational, once the price falls at the speed and to the extent it fell, it should have gone to zero. But it didnt, it is back up 400% from low last year. That suggests it is not simply irrational pricing of a bag of hot air, as all such bags of hot air throughout financial history have always dropped to zero when the price falls this rapidly. They certainly didn't recover to 400%+.

So the bag of hot air analogy doesn't fit. It must be something else.
 
Hi Wolfie

You have made an extremely large and false jump in logic. You seem to be saying
"Real assets which go into a bubble expand quickly. Then they fall. They fall below their intrinsic value. Then they rise again. (all true so far). Therefore, Bitcoin is a real asset"

I am sure that there is a term in logic for such false reasoning. It's like saying
"All ducks have heads.
That animal has a head.
Therefore it is a duck."

You better be careful. You might get savaged by a lion with such logic.

Brendan
 
Hi Brendan

What im pointing out is that throughout the history of finance, all bags of hot air that have been blown into a bubble returned to zero once the price began to collapse, and never rose again.
It think a price fall from €16,000 to €2,500 in such a short space of time is reasonably considered a crash. So if bitcoin were a bag of hot air it would have continued on its trajectory toward zero, like all other irrational and speculative bags of hot air throughout the history of finance.
It didn't. Its price has since risen 400%. This is counterintuitive to the bag of hot air analogy.
Im simply pointing that out.
 
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