CEO of ShapeShift Erik Voorhees in an interview, expressed his views that bitcoin and crypto price bubbles are a definite part of their chronology. There have been crypto bubbles of immense magnitude in the past, and they have amused crypto analysts who have tried to dig out the importance of these incidents.
The past price bubbles of bitcoin also show us that prices do not matter unless the crypto is strong enough to maintain them. Now that bitcoin has reached up to a recent high of $8,000, Voorhees is anticipating another bitcoin bubble.
There have to be bubbles in crypto because crypto is taking over the world, and it’s not going to just advance 5% a month without end. If it did that, people would start buying it up and frontrunning it and turning it into a bubble. So there’s no way to go from a zero dollar asset to one that is worth trillions without massive speculation and massive volatility and cyclical bubbles.
Voorhees is of the view that the crypto market is not always bullish in a regular pattern, lets say increasing by 5% on a monthly basis. He said that there are bearish trends as well which is why bubbles happen after a certain time. Bubbles appear when people buy bitcoins, reserve them and then sell them, creating a rush of people who want to buy them.
The bubble logic means that bitcoin shoots up for a rather short period of time and then turns dormant again as the prices fall down. The host of Crypto Trader, Ran NeuNer, has previously stated that if the bitcoin was a bubble, we wouldn’t have seen its resurgence at all. While this seems to be closer to truth, several critics have jumped in claiming that the bubble logic fits when we take several intervals out of bitcoin price chronology.
The critics calling bitcoin just a bubble in their publications do not hold water at all and I don’t have any respect for this opinion. Let’s say bitcoin WAS a bubble, it couldn’t have popped twice.
NeuNer, a bitcoin maximalist, claims that bitcoin is a healthy market and is worth investing in. He further clarified that we have seen bitcoin emerge from the darkest of times, witnessed a bear market and then booming to the strongest of bullish behavior. This is not what a bubble refers to at all, as per NeuNer. The reason behind NeuNer backed bitcoin is that even after the longest bear market of recent times, bitcoin is now shooting up. The cryptocurrency has reached to recent highs of a little over $8,000 with speculations that there is another bull run on the way.
There have been four bubbles in bitcoin’s history till now, according to Barry Silbert, founder and chief executive officer for the Digital Currency Group. The first can be tracked back to 2011 when the bitcoin price surged to $31 and then fell down to a low of $2. The second bitcoin bull run witnessed bitcoin jump to $259 and fall down to $45. The third bitcoin bull run saw the crypto’s price surge to $1,141 and collapse to $152. The last bull run happened in the fourth quarter of 2017 when bitcoin sent the whole world into a frenzy by reaching $20,000 price point, but later struck to a low of $4,050. If we look closely at the crypto bubble pattern, we can notice that the high point in price keeps getting considerably greater, which is a good sign for traders.
Bubbles benefit several entities ranging from investors to a normal user. Whenever a bubble appears, it is the best time for investors and public to invest and jump into the crypto market. However, bubbles also happen to appear when a crypto is either weak or is facing scandals or scams. Bitcoin bubbles happened mostly because crypto reforms are still undecided, with people wondering about the future of bitcoin. Nevertheless, bubbles also bring newer heights as they allow cryptos to find a new direction and attain stability, weeding out the weak points.
Bitcoin has reached the highs of $8,000 recently, sparking speculations that another bubble is on its way. The next few weeks are going to be very interesting for the crypto world as it might just set a new direction for bitcoin.