When Will the Bitcoin Bubble Burst? Why Bitcoin is Going to Crash

Bitcoin recently surged to around $17,000. That’s an over 50% increase since this time last week, and over 20x (2000%) what it was worth at the beginning of the year. So why is it growing so quickly? In this video I’m going to tell you why it’s risen and what will happen next. But first, I am not offering financial advise, I am telling you my personal, amateur opinion of Bitcoin’s price increase. Please do your own research before you buy or sell anything! Yes, I have invested in crypto currencies, so this is not from the perspective of a bitter loser (Though, I’m that as well). And like a lot of people, I invested with the intention of making money. I invested in Bitcoin and a coin called Vertcoin, I made removed £2k… And that’s the problem, I invested to make money that was all.

Prices of commodities generally change due a principle called supply and demand. If it’s a hot day and you want to buy an ice-cream from the local shop but they’ve only got a couple in stock, people would pay more for an ice-cream. Demand drives the price up. Likewise, if the weather takes a turn and nobody wants ice-cream, the price would have to fall due to decreased demand. Now imagine that its a cold day but there’s a rumour going round that there’s a heatwave in a few days and you could make some money from buying ice creams. The rumour gets around and every local shop rushes to buy ice-creams, pushing up the price. The price is still rising to an increase in demand but this demand is driven by speculation and greed rather than an actual need for all those ice-creams. This is called a bubble. Now there are two possible outcomes. Even if the warm weather does arrive, if too many people bought ice-cream then supply outstrips demand, pushing the price down. If the warm weather never arrives, everyone who bought ice-cream will lose money because there’s no demand and they’re stuck with the ice-creams. The bubble bursts.

The situation I’ve described is exactly what’s happening with bitcoin. Bitcoin price should increase because it’s a useful currency, it’s decentralised, all the things supporters of Bitcoin will say is the reason for the price increases we’re seeing. Let me tell you, a surprisingly few people believe this. I’ve received a lot of support of people who actively engage in the Bitcoin community. More people, even investors, realise that the price increase is a bubble due to the hype and expectation that it will never stop increasing in value. As one Facebook advert I saw puts it, “BITCOIN will exceed $400,000 by 2020”. People don’t want to miss out on a money making venture that seemingly will never end, and people are greedy, so everybody is trying to buy Bitcoin to make their millions. I sympathise enormously.I missed out. in 2009 I tried to buy £100 of Bitcoin but couldn’t work it out, it was too scary and too complicated. If I had bought it, and crucially I’d kept it, which is unlikely, I’d now be worth 24 million dollars.

Let me tell you, it will end. The bubble will burst. It could take 5 years, it could happen tomorrow. One of the golden rules when dealing with any financial instrument is that you should sell when your neighbour starts investing. We’re almost at the stage where the neighbour and the neighbours cat are invested in Bitcoin. If you want an historical example of a bubble bursting, this of the .com bubble. Also, look up Tulip mania on Google. There are news stories literally everyday tell us how bitcoin has surged through a new record price, bringing the currency to the attention of new people. I did see a couple of BBC articles interviewing people who were skeptical about Bitcoin’s success, but the latest article tells us about 3 people who have made money from it, all around 30 years old, one made enough to start a business, one made enough to retire. Yes, they made money, but they could have lost it all. It’s irresponsible to report these stories when they essentially made their money through a gamble. They’re feeding the hype that causing the problem.

In the short and even medium term, prices many continue to rise. Nobody who claims to know when the price is going to collapse actually knows – even it does happen when they predicted, that’s called chance. But, as I said earlier, it will collapse eventually. If you are going to jump on this bandwagon to make a quick buck, please, please only invest / (gamble) what you are happy to lose. Please don’t risk your livelihood – you could lose it all.

Just my ramblings. All opinions would be gratefully received.


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