Enthusiasm for bicoin is running sky-high, but can these digital markets continue to push even higher? That's more than a fair question, especially in light of the meteoric rise in cryptocurrencies. For bitcoin, the king of cryptos has cleared the $2,300 mark. In just the trailing 30 day period, it has gained 84.5%. Surely, the bullish rally is exhausted?
Investors can use recent history as a clear warning against irrational optimism. In 2014, bitcoin returned nearly 180% for the year, even after gaining more than 2,180% in 2013. At the time, it appeared that bitcoin and cryptocurrencies could not be stopped. However, that assumption was laid to rest when valuations crumbled in 2015. For the first time since its launch, bitcoin went negative on an annual basis.
Of course, those that didn't panic out enjoyed what can only be described as a market jubilee. At the trough of 2015, bitcoin stumbled to $177. Investors who got in at that time would pocket a monstrous 1,200% windfall.
But that was then. Can investors who are just waking up to the opportunity in cryptos and the digital markets profit from entering today?
Bitcoin enthusiasts will affirm that this is indeed the case. But let's be real -- a proponent of any market or industry would support the sector in question. And typically, prognostications that bitcoin is still "early in the game" result from gut feelings of prominent spokespersons. Their opinions may be valid but it's difficult to determine this without a more quantitative basis.
Bitcoin Looks Incredibly Overvalued...
If we're being intellectually honest, the present bitcoin rally is a tough one to swallow. Maybe there are folks who thought about jumping on bitcoin when it cratered two years ago, but ultimately chose to not follow through. I'm sure they're regretting that decision. Or, newcomers want to join but are fearful of a collapse -- at $2,300, that is quite a bit of pocket change.
To be fair, the technical picture doesn't assuage those concerns. Presently, the highs of this year are soaring well above this year's average price point. This is an indication, though not a complete confirmation, that bitcoin's price is getting ahead of itself.
Between 2013 and 2014, we witnessed a similar dynamic. The high was nearly $1,150, whereas the average was a mere $189. Although bitcoin continued to trudge ahead, the digital markets were due for a correction, which came in 2015 as previously mentioned.
Are we headed towards yet another meltdown scenario? Should new investors wait before diving into bitcoin?
As you'll see, the present market dynamic for bitcoin is incredibly deceiving...
You do NOT want to miss the stunning conclusion of Bitcoin's valuation! The rest of the article is at Crush The Street -- https://crushthestreet.com/articles/breaking-news/bitcoin-early-stages-bull-trap
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Yes it is a madness out there. If bitcoin is in bubble, and I think it is. What we can say about other crypto. Just look at ETH or PEPECASH :)
Thanks for posting!
You're welcome...there'll be more to come!
Seems the word on the street is buy a bit but save for a correction?
I'm not sure what the street's opinion is ... I'm just sharing what I see on a quant basis. Without trying to predict every little dip and dive, I'll say that the long-term trend looks very robust, even at $2,300+.
I like your ideas!
Thank you!
I like it. I think Bitcoin will continue to rise for a while. I, for one, am enthusiastic about it!
Interesting!
Thanks!
Your only considering demand based on price. What about demand as a new technology?? Few knew about bitcoin and as awareness grows .. so grows demand. Bitcoin is what cell phones were. I remember when cell phones were rare. Now everyone has them. The rate that they went from rare to common was fast and bitcoin will move even faster than that cycle.
Demand is defined by Investopedia as "an economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service." My "only" considering demand based on price is the only way to gauge demand. Awareness alone does not generate demand. People must be compelled to buy bitcoin, in this case. As more people buy, the price rises. When the price no longer rises, that is the point where demand has peaked. I hope that clarifies.
Its easy to think of bitcoin as a stock but it is much more than that. It is a deflationary decentralized currency. There will only ever be 21 million. The "bubble" as many put it is in the dollar. Not the other way around. USD is falling in price. only a fool would want dollars that are falling when they can hold decentralized currency that is Deflationary currency. All the currencies of the world are failing. Selling now will just put you back into a weakening currency. Bitcoins are just getting started to rise. 2016 and 2017 are the year of bitcoin awareness. The sleeping giant "buying demand" is just getting started.
You are conflating multiple issues, and are bringing up topics that do not pertain to the scope of my article. Based on your pedantic tone, I don't think you read my entire piece. I'd suggest you follow the link I provided to Crush The Street to get the full picture.
Once you do, you'll see that I hardly need an education towards bitcoin's bullish possibilities!
My reply was based on the question you posted that we may be in a bull trap. I dont think so, and I shared why I don't think so. Sorry you feel that my comments may threaten or question your knowledge. I thought you wanted to have a discussion and were open to a different point of view.
You understand that pedantic does not mean threatening, right? Also, the question was are we in the early stages or a bull trap. The CTS article that I linked to provides the entire analysis. Indeed, it solidifies the bullish argument.
So, bottom line, if you're bullish on bitcoin and do not believe that we're in a bubble, we are in agreement!
Pedantic is someone who is concerned with precision and detail in order to make an arrogant show of how much they know. Are you sure your not the one doing that ??? I think the bull market hasn't even started yet. This thing is going to have over a trillion plus dollar market cap. I didn't sense you were that bullish when I read your article. Your right that I didn't click the link for more info. I was going based on what you posted here.
Lol.
I think that people who use words like "pedantic" are the very definition of pedantic. Thanks for the new word. I never heard it before. But since you wanted me to know your very high level of knowledge that was very pedantic of you.
It's a very fair and succinct statement. I could say, "you're saying a whole bunch of valid arguments from multiple angles that align with my central conclusion even though it seems like you're disagreeing with me" but "pedantic" is a heck of a lot easier!
Having understood that you didn't read my entire article, I get what you're saying now. We're on the same team, so to speak.
What is the value of decentralized money? Depends on who you are. What if your a corporation that wants to trade with another corporation without government intervention? What if your a country and you want to diversify part of your reserves outside the standard gold, bonds, fiat variety?? whats it worth to the big players?? Korea and Japan are the largest buyers in our current uptrend. Do you think they are in this to make a few bucks? No. they have a much larger purpose in mind. Traders are just along for the ride.