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Why and how the Cryptobubble will burst
- kapauldo 9y agoHappy that there isn't much disagreement here. A rational consensus is uncommon on Hn.
- chaoticmass 9y agoI don't see how Crypto 'Market Cap' is in any way related to the term 'Market Cap' as related to traditional stock.
- Beejeepa 9y agoSure, it will burst. The Internet Bubble burst. And here we all are.
- charlesdm 9y agoBut not before first going up to $5.6tn in value though, and then crashing back to approx. $1.5tn. The entire crypto space is at $200bn now.. :)
- ggambetta 9y agoJust yesterday I saw an ad on the Tube[1] - "Buy & short cryptos" / "Copy expert crypto traders" / "Invest in a crypto portfolio", and made me think of cabbies giving stock tips previous to the 1987 crash. [1] Pic here: https://twitter.com/gabrielgambetta/status/926787567365902336 https://twitter.com/gabrielgambetta/status/92678756736590233... [2] Turns out it was shoeshine boys and 1929 (http://archive.fortune.com/magazines/fortune/fortune_archive/1996/04/15/211503/index.htm http://archive.fortune.com/magazines/fortune/fortune_archive...), but my point stands :)
- charlesdm 9y agoAt a market cap of $200bn, it's hardly comparable. In fact, it's not even a blip in the grand scheme of things. If this really is a bubble, current prices are cheap (imo) and it will head into the many trillions of dollars. But that's me putting on my speculator hat.
- chrisco255 9y agoThere will be a shake out, no doubt. The more valuable question to ask and answer is "which" cryptos will survive and thrive and "when" will this bubble burst?
- csomar 9y agoInterestingly, the deflation that happened recently in ICOs and Alt currencies seems to have boosted Bitcoin price (as the % share of bitcoin jumped) While a bubble burst will affect most of the crypto, I wonder if crypto-currencies will survive the effects differently.
- xer 9y agoBubbles are everywhere, one you probably never heard of is called humanity, yes our species. One significant fuel of blockchain tech is the distrust in the current financial systems. If central bankers and governments could regain trust there is a probable chance of a bust.
- PatientTrades 9y agoThis article fails to address the major question. Why and how are not important. The only thing that matters is WHEN the bubble will burst. Nobody can answer that question. My best estimate is around the 2020 election cycle when regulation of cryptocurrency becomes a major issue
- mgbmtl 9y agoSeems to me mostly a (valid) criticism of ICOs, which are kind of like penny-stock. No one would put all their money in a single penny stock, right? It doesn't say much about buying stock in companies who have 'blockchain' in their name. Many of these seem like traditional startups (and many will fail), but can any of them provide fast growth? if not, any long term value? Disclaimer: outsider point of view, I know nothing about this. I stopped using Bitcoin when renewing a domain name would cost me $5 in fees for a $15 transaction.
- neals 9y agoIt already burst a couple of times actually. Back with MtGox we had quite the burst and a long period of decline. Or how about the 5 times China forbid Bitcon? Burst after burst. As with the internet: we continued to built it anyway. Adding value to the network in our own way. I have not stopped working with Blockchain technology no matter the price. I went from millionaire to nothing back to multi-millionaire and I have just kept on working. And I will keep on working, bubble or no bubble, there's always going to be cryptocurrencies and cryptocurrencies-innovation and work for developers and a nice people and fun projects.
- tmlee 9y agoThe number of bursts can also be summarized from history of heists https://imgur.com/0WDy5Wo https://imgur.com/0WDy5Wo The MtGox magnitude was way way larger than what we have seen so far.
- nnfy 9y agoWhile I suspected the same, after reading the article, the author does not conflate the bursting of the crypto bubble with the price of BTC. After this realization I was able to set aside my indignation and observe that the author makes a good point in that most other Cryptos and "blockchainy" startups are doomed to fail, while BTC as he claims will likely recover (he makes some mention of a v-shaped price trend in BTC when the bubble bursts.
- bsenftner 9y agoAs a developer of these technologies, you're in a completely different situation than the investors. Crypto-technologies have obvious value anywhere privacy is desired, but once productized as a virtual floating asset, the value becomes much harder to quantify, and then the grifters appear. Seems to me incorporating less privacy, a private side-channel for checks and balances of sorts, is something necessary. But I'm not a crypto-technologist, just someone with a graduate economics education, so my impressions may be irrelevant.
- deleted 9y ago[deleted]
- thisisit 9y agoThis one is one hell of laborious read. Though on the top highlight: > This is the reason why things like technical analysis work much better in crypto than in equities, because these markets are quite obviously more likely to be driven by fear and greed than established markets. It works because as the author puts it " the field is made up almost exclusively of newcomer retail investors that probably have never held a stock in their life." In which case, trading is mostly done by reading some trading books. Fundamental analysis tools like valuation etc. are quite vague and don't really provide a simplistic "if a, then do b" answers. So, people turn to TA which is much easier. If a significant amount of people follow it, then it becomes a self fulfilling prophecy. That said, author also seems to use TA as well: https://medium.com/@dennyk/trying-to-make-sense-of-the-elliot-waves-situation-in-bitcoin-at-the-moment-872f619b7302 https://medium.com/@dennyk/trying-to-make-sense-of-the-ellio...
- nnfy 9y agoI think many crypto-currencies (with and without ICOs) are rather obvious cash grabs that provide no actual value beyond speculation (e.g. dogecoin); was something comparable going on during the .com bubble? Were there many companies offering no actual value and taking in cash? Edit: I originally conflated cryptos with ICOs, and have since corrected the mistake.
- Xophmeister 9y agoDogecoin is a cryptocurrency in its own right, rather than an ICO.
- nnfy 9y agoYou're right, I misspoke. My point I think still stands - there are something like 1-2 thousand different Cryptos, many without ICOs, but there is little value in purchasing them, be it via ICO or an ordinary exchange.
- deadmetheny 9y agoDogecoin was made to take the piss on Bitcoin, not as an ICO. The fact that Dogecoin isn't currently worthless is a testament to how hilariously blind people are to the bubble.
- xur17 9y agoI made money buying and selling UET (Useless Ethereum Token) [0]. There were open buy orders on an exchange for more than it was actively available for via ICO for a period of about a week. So naturally I made a bundle buying and selling it. In this case it was the confusing ICO terms that made it profitable. [0] https://uetoken.com/ https://uetoken.com/
- deadmetheny 9y agoImpressive. I unironically applaud your success on making money off complete idiots.
- 3pt14159 9y agoDisclosure: I sold most of my Bitcoin, and I own some Dash and Sia. > cheaper at some point over the next 12 months is extremely high. I agree with 85% of this post. Except two things: 1. I think people dramatically underestimate the likelihood that Bitcoin and all cryptocurrencies get completely banned. ISIL isn't ransoming civilians for Bitcoin yet. They, or someone else will. Politicians and judges aren't getting contract killed via cryptocurrencies yet. They probably will. Governments are going to give people a choice: we're regulating you (signing transaction reversal with a special US TREASURY key, say, or requiring real identities behind addresses) or we're shutting you down. This even has precedent (eGold in the 90s). I think Bitcoin has a higher chance of surviving this than Etherium because it's less complex of a change. 2. Just because you can call that there will be a Bitcoin pull back in the next twelve months, doesn't mean that it will be less than the price right now. Bitcoin has gone up a lot in the past 12 months and it can go up a lot more in the next 6. If it crashes from $25k a coin to $5k a coin you aren't really giving good advice for what to do today. Personally I hope it crashes to $1k soon so I can buy back in. Feeling kinda dumb for selling at $6k CAD, but it really could hit $50k before the pullback.
- eof 9y ago> . I think people dramatically underestimate the likelihood that Bitcoin and all cryptocurrencies get completely banned. I expect this will be almost as effective as the banning of narcotics, pirated media, alcohol during prohibition, etc. It's far, far too late for this to have a lasting effect (though certainly a short term reduction is price is likely)
- empath75 9y agoIt won't be effective at destroying bitcoin as an effective currency for illicit activity, but it absolutely would destroy the price, because you'd only be able to trade it outside of major exchanges, and without interacting with the american banking system, which would be hard.
- dragonwriter 9y ago
- Shorel 9y agoFrom what I have seen, Bitcoin is not a single bubble. It is a endless stream of bubbles, and I see no end in sight. Each bubble bursts and after a while it starts bubbling up again. So, yes, it will burst. Many times. But that doesn't mean it will be the end of it.
- saas_co_de 9y agoIt also goes along with the stock bubble which is absolutely fueling it. You have a bunch of people with inflated net worths from their stock holdings who are being sold on Bitcoin as the "new gold" and a way to diversify their portfolios.
- cableshaft 9y agoJust wait until the stock market crashes again and investors need to exit and park their wealth somewhere for awhile. I bet Bitcoin will be one of those places that wealth will go.
- saas_co_de 9y agothat is one way things could go. the other is that when over-leveraged people who are living way beyond their means see their stock portfolios collapse they are all going to try to liquidate their crypto at the same time and so crypto will collapse the same as stocks.
- cableshaft 9y agoThat is certainly possible. I've liquidated some assets before when I really didn't want to just because I was going through some tough times financially.
- DonHopkins 9y agoIt's carbonated from all the CO2 it's pumping into the environment.
- ryanmarsh 9y agoAmazon survived (thrived) the dot-com burst. I see no reason to believe the same won’t be said of at least one coin. My money is on bitcoin and etherium.
- gadhaa 9y agocan someone please tell medium.com to fix their certificates! Error code: SEC_ERROR_UNKNOWN_ISSUER --firefox-- The owner of medium.com has configured their website improperly. To protect your information from being stolen, Firefox has not connected to this website. --chrome-- Your connection is not private Attackers might be trying to steal your information from medium.com (for example, passwords, messages, or credit cards). Learn more NET::ERR_CERT_AUTHORITY_INVALID
- Johnny555 9y agoMy Chrome on OSX seems happy with their cert. As does Safari. maybe OSX includes the DigiCert intermediate cert that your browser/OS does not have.
- mrpound 9y agoThis may be caused by a missing intermediate cert on your machine.
- tonyztan 9y agoShouldn't sites be serving the the full trust chain, except for the root?
- jakub_g 9y agoTheir config seems top-notch, they send all intermediary certs: https://www.ssllabs.com/ssltest/analyze.html?d=medium.com https://www.ssllabs.com/ssltest/analyze.html?d=medium.com What is your browser/OS?
- thinkloop 9y agoOn the flip side gold has been in a 3000 year bubble without signs of bursting. The value of gold is far higher than it's industrial/luxury demand.
- cjbenedikt 9y ago"In the crypto bubble, the field is made up almost exclusively of newcomer retail investors that probably have never held a stock in their life." Any credible data source to back this up. Doesn't sound realistic at all.
- charlesdm 9y agoIt's not. Hedge funds have been moving in for a while, some institutional money is getting ready to move in in the next 6 to 12 months.
- cjbenedikt 9y agoPrecisely my thoughts....plus HNWIs. BIG difference to dot.com bubble when stocks were peddled by major brokers.
- charlesdm 9y agoHonestly, I think it'll come. We're just not there yet (few years off)
- smokeyj 9y agoBlogger predicts bitcoin is a bubble. HN violently agrees. News at 11.
- 1derful 9y agoEveryone knows that speculation is outpacing the current value of crypto, but unlike the .coms of the 2000s, there is inherent long term utility in the biggest cryptocurrencies. I can't tell what the true value will be, but there is value in these currencies independent of the fact they are trendy investments.
- TYPE_FASTER 9y agoThe startup bubble separated the companies with some value (Amazon) from companies with no real value, or not enough to justify their existence. It is challenging for me to separate rampant FOMO speculation from the use of cryptocurrency as a currency (Zimbabwe), but I suspect something similar will happen. The technologies and platforms that enable true digital currency use will end up flourishing for the long term.
- warent 9y agoAs an aside, it's interesting that Bitcoin can lose 10% of its value in a single day, and the media/bloggers will use language like "slight decrease" or "faded value" to downplay how serious that amount really is. (Bonus points for "The price is stabilizing" when it dips) If it were possible to short bitcoin, we'd be hearing a very different choir (Edit: I was mistaken, it is possible)
- stri8ed 9y agoIt is possible to short Bitcoin on many exchanges.
- lawn 9y agoYou need to see it in the context. All cryptocurrencies are extremely volatile and they routinely go up and down 10%. You simply can't compare the volatility to the stock market where similar numbers would make blood flow on the streets. Here it's almost business as usual.
- jokoon 9y agoI wonder, isn't bitcoin much more power-hungry than other forms of currency?
- evil_rumsfeld 9y agoBitcoin's bubble will pop and reform, but it's unlikely to completely burst into oblivion.