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So how does a bubble in Bitcoin pop? Since there's no real underlying value does it just take the spread of the idea that Bitcoin is a bubble?

chickenfries 9y ago
Maybe another Mt Gox.
- 659087 9y ago
  GoxFinex
m1sta_ 9y ago
People stop buying. That’s it. There is no underlying value. There is no floor to the price of a coin.
workthrowaway27 9y ago
I've been wondering this too. Its price is obviously not supported by anything, but that was always the case. My bet is the price naturally starts to come down as someone with lots of bitcoins tries to cash out, then others panic trying to cash out as the price declines and the price rapidly crashes after that.
pmoriarty 9y ago
Why not just the same way as any other bubble? People start selling in vast quantities, other people see the selling and panic, the currency devalues, and the selling snowballs until it's a small fraction of its former value. The big questions are if that's ever going to happen, and if so, when? Unless you've got a time machine or have cornered the market, though, I'm not sure how you could ever know.
- frgtpsswrdlame 9y ago
  Well here, let me explain: if gold is a bubble someone comes up and says, gold is overvalued, here's x, y, z that explain why it's overvalued. That idea spreads, people stop buying and start selling, boom bubble popped. With bitcoin though, I don't see a good way to say bitcoin "is overvalued, here's x, y, z that explain why it's overvalued." There's really no explanation for it's value at all, that's the aspect of bitcoin that resembles a currency.
  - bllguo 9y ago
    No, like GP said, all it takes is for some people to sell large amounts of BTC, and for other people to notice and panic. That's it. IMO you're really overthinking things. I suppose you're trying to guess why those first sellers would sell? Seems like a pointless exercise. There could be any number of reasons. A mysterious authority figure convincing them that BTC is overvalued is just one (unlikely) possibility.
  - nostrademons 9y ago
    There hasn't actually been a reason for gold's value since 1933, when FDR took the U.S. off the gold standard. And gold has exhibited similar bubble behavior as Bitcoin since, eg. the 1980 bubble when it went up 5x in a year and then crashed 50% the next year, or the 2005-2011 bubble where it went up 4x and crashed by 40% over the next couple years. It really is as simple as other posters are saying: when there are more buyers than sellers, the price goes up, and when there are more sellers than buyers, the price goes down. The reason for there being more sellers than buyers could be as simple as people losing interest and moving onto the next shiny thing. You can't eat either gold or bitcoin, so in the absence of continued attention, there's natural selling pressure.
leetcrew 9y ago
my theory is that one day soon china will crack down even more on bitcoin to combat tax evasion and clear the field for their own cryptocurrency. once it becomes a serious risk that major players could ban it outright, confidence might never recover.
empath75 9y ago
A lot of the dumb money coming in now can’t actually afford to lose the money they’re ‘investing’ and will sell at the first sign of weakness. There are already problems withdrawing from exchanges, if a mass of people panic and want out, it could trigger a run on the exchanges, some of which are rumored to be running some kind of fractional reserve. All it’s going to take is a few grannies losing their retirements for the congressional hearings to start, etc. I think it can probably still double or triple from here, so I’m not gonna try and call the top, but chronologically, I don’t think it’s too far off—6-9 months is my guess.
kamaal 9y ago
Like everything else. At some point in time. The price of one single coin will be bonkers to the point of disbelief. Round about the same time, there won't the next set of greater fools to drive the prices any more up. Then a good deal of people will want out. Demands comes down, supply goes up and prices come crash down. At the end people just sit down and realize along the way it generally never was a good idea to be playing this game at all.

chickenfries 9y ago

Maybe another Mt Gox.

659087 9y ago
GoxFinex

m1sta_ 9y ago

People stop buying. That’s it. There is no underlying value. There is no floor to the price of a coin.

workthrowaway27 9y ago

I've been wondering this too. Its price is obviously not supported by anything, but that was always the case. My bet is the price naturally starts to come down as someone with lots of bitcoins tries to cash out, then others panic trying to cash out as the price declines and the price rapidly crashes after that.

pmoriarty 9y ago

Why not just the same way as any other bubble? People start selling in vast quantities, other people see the selling and panic, the currency devalues, and the selling snowballs until it's a small fraction of its former value. The big questions are if that's ever going to happen, and if so, when? Unless you've got a time machine or have cornered the market, though, I'm not sure how you could ever know.

frgtpsswrdlame 9y ago
Well here, let me explain: if gold is a bubble someone comes up and says, gold is overvalued, here's x, y, z that explain why it's overvalued. That idea spreads, people stop buying and start selling, boom bubble popped. With bitcoin though, I don't see a good way to say bitcoin "is overvalued, here's x, y, z that explain why it's overvalued." There's really no explanation for it's value at all, that's the aspect of bitcoin that resembles a currency.
- bllguo 9y ago
  No, like GP said, all it takes is for some people to sell large amounts of BTC, and for other people to notice and panic. That's it. IMO you're really overthinking things. I suppose you're trying to guess why those first sellers would sell? Seems like a pointless exercise. There could be any number of reasons. A mysterious authority figure convincing them that BTC is overvalued is just one (unlikely) possibility.
- nostrademons 9y ago
  There hasn't actually been a reason for gold's value since 1933, when FDR took the U.S. off the gold standard. And gold has exhibited similar bubble behavior as Bitcoin since, eg. the 1980 bubble when it went up 5x in a year and then crashed 50% the next year, or the 2005-2011 bubble where it went up 4x and crashed by 40% over the next couple years. It really is as simple as other posters are saying: when there are more buyers than sellers, the price goes up, and when there are more sellers than buyers, the price goes down. The reason for there being more sellers than buyers could be as simple as people losing interest and moving onto the next shiny thing. You can't eat either gold or bitcoin, so in the absence of continued attention, there's natural selling pressure.

leetcrew 9y ago

my theory is that one day soon china will crack down even more on bitcoin to combat tax evasion and clear the field for their own cryptocurrency. once it becomes a serious risk that major players could ban it outright, confidence might never recover.

empath75 9y ago

A lot of the dumb money coming in now can’t actually afford to lose the money they’re ‘investing’ and will sell at the first sign of weakness. There are already problems withdrawing from exchanges, if a mass of people panic and want out, it could trigger a run on the exchanges, some of which are rumored to be running some kind of fractional reserve. All it’s going to take is a few grannies losing their retirements for the congressional hearings to start, etc. I think it can probably still double or triple from here, so I’m not gonna try and call the top, but chronologically, I don’t think it’s too far off—6-9 months is my guess.

kamaal 9y ago

Like everything else. At some point in time. The price of one single coin will be bonkers to the point of disbelief. Round about the same time, there won't the next set of greater fools to drive the prices any more up. Then a good deal of people will want out. Demands comes down, supply goes up and prices come crash down. At the end people just sit down and realize along the way it generally never was a good idea to be playing this game at all.