Since the inception of Bitcoins in 2009, the price of this digital currency has skyrocketed to dizzying heights. At the start of 2017, one Bitcoin cost just over USD $1. Now, one Bitcoin costs over USD $21,000. Crypto markets have grown rapidly over the last few years and are projected to continue doing so in the future. But is the market a bubble about to burst or is it here to stay?
The original value of Bitcoin was less than USD $1 when it was launched. However, in early 2014, the price of BTC hit an all-time high of USD $133. This illustrates how quickly the cryptocurrency market has grown in just a few years' time. However, some cynics have claimed that this market is actually a bubble waiting to burst. They make this claim because of two factors: 1) how quickly the market has grown and 2) how quickly prices have fallen recently.
Scenarios where prices fall dramatically are referred to as 'crash' scenarios by many crypto enthusiasts. These scenarios typically occur when various countries attempt to regulate the crypto market by banning crypto transactions or investing in them. Because crypto markets are largely unregulated, countries attempting to regulate this market will find it very easy to do so. This is because there is no central authority that regulates cryptocurrency transactions. As a result, any country able to influence this market can effectively prohibit transactions they don't like- which is referred to as 'capital controls'.
Apart from regulation, another factor that can cause a crash is scams- especially when dealing with cryptocurrency markets. Since these markets are largely anonymous, investors have no way of knowing if they're being scammed. This makes it difficult for investors to protect their money and can cause panic in these unstable markets. As a result, many people believe that crashing markets are usually caused by schemes or government regulations while also being prone to scams.
While many consider crypto markets to be a bubble due to their rapid growth and frequent declines, others disagree. The fact that these markets are still so new makes it hard for anyone but the market itself to define when a bubble will burst. In addition, regulators and scammers have already created instability in these markets that could potentially lead to another crash unless steps are taken against them. Until then, watch this space!
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