Bitcoin Prices: Is the Bubble Finally Bursting?

Posted On January 2, 2018 2:34 pm

The actual worth of Bitcoin is uncertain, especially as of late. After the drop in Bitcoin prices last Friday, the currency’s value was reduced significantly.

A few days of losses resulted in a decline in value of as high as 30 percent in a single night in Asia, and the price action became so turbulent that the website Coinbase no longer opened for trade. Later that day, Bitcoin prices dropped 9.5 percent to $14,042, as the data obtained from CoinDesk showed.

Experts warn that the current price trend of Bitcoin indicates that it is a bubble, which is bound to burst sooner or later, if it hasn’t already.  However, they project that the price of Bitcoin will could still move higher before the bubble finally bursts.

Although many people have currently heard of Bitcoin, only a relative few actually have an investment in Bitcoin currently.

The chief market analyst for First Franklin, Brett Ewing, talking about the price trend of Bitcoin, said that bubbles burst when the last buyers jump into the scene. According to him, the last buyers are always the masses, which are the unfortunate ones.

About 1000 People Own 40 Percent of Bitcoin

According to Ewing, 40 percent of Bitcoin belongs to merely 1000 people. Hedge funds and other key investors may begin to invest in Bitcoin soon, but those hedge funds may also shield themselves by placing bets on a potential Bitcoin fall.

Ewing warns current investors and prospective Bitcoin buyers to move with caution.  The massive fall in price in a single day is an indication of what could happen after the gigantic rise is over.

Bitcoin Prices Decline Every Three Months

The steep rise in Bitcoin prices, which make it difficult to be used as a means of exchange when you want to purchase goods and services, has fueled an intense speculation about when the bubble might rupture.

Bitcoin price has been very volatile in the past. There was an 11.5 percent fall over two days in early December and 21.5 percent fall within five days in November.

Due to increasing curiosity Bitcoin has now moved to the futures market, where traders and speculators can gamble on the direction of Bitcoin’s next move.

Bitcoin futures began trading on two key exchanges, the CBOE and CME, just this past month. Those futures fell roughly 8 percent last Friday.

The Long and Short of It

It’s possible that many investors will be hit hard when the price falls. That’s why so many experts are now issuing warnings to investors and speculators before this happens.

The Securities and Exchange Commission has also issued a similar warning to investors to be careful with Bitcoin and other cryptocurrencies.

The Commodities Futures Trading Commission is planning to regulate Bitcoin as a commodity, much the same as with gold or oil.

Financial Industry Regulatory Authority has also warned Bitcoin investors to be cautious.

 Related: Will Uber’s Problems Delay Its IPO? Here’s What You Should Know. 

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