Bitcoin’s enthusiasts are torn between whether to celebrate Bitcoin’s arrival in the foothills of mass adoption, or to lament the upcoming burst that always happens with asset bubbles. There is evidence for both points-of-view, as some indicators point toward Bitcoin’s imminent mainstream arrival, while others suggest the price is in bubble territory.
Bitcoin entered a bull market in August 2016 at a price of about $550 per coin, according to data from Cryptowatch, leading the currency to surmount its previous all-time high back in March of this year. Since March, Bitcoin has been on quite a tear, rising from $880 to a high earlier this week of $3490.
Such extremely rapid price appreciation is not usually considered normal in the investment world, and may presage an epic crash. Since one year ago, the Bitcoin price is up by 611%. Since March 2017, the price is up by 381%. This points to rapid, perhaps unsustainable, growth.
But what exactly is a bubble? Investopedia defines it as:
“A financial ‘bubble’ refers to a situation where there is a relatively high level of trading activity on a particular asset class at price levels that are significantly higher than their intrinsic values.”
The catch is the term “intrinsic value.” Not all rapid price appreciation must necessarily be a bubble. To meet the definition, the price of an asset must have greatly exceeded its intrinsic value.
Unfortunately, nobody knows exactly what Bitcoin’s intrinsic value is at this time. There are a number of signs that point to major shifts in the reaction of industry and government with respect to Bitcoin. Though the SEC rejected two proposed Bitcoin ETFs, the Commodity Futures Trading Commission (CFTC) recently approved LedgerX’s application to trade Bitcoin futures contracts.
Meanwhile, in other parts of the world, Japan and South Korea have officially legalized Bitcoin and allowed it to be used for payments. Additionally, the Blockchain technology which underpins Bitcoin has begun trial use in areas as diverse as social media, tracking meat through the supply chain, and to help families find lost refugees following conflicts.
Likewise, the recent lock-in of the Segregated Witness (SegWit) improvement means that Bitcoin will soon be able to process more transactions. More important, SegWit will allow numerous other services, such as lightning network, to be built on top of the Bitcoin protocol. Such services can offer privacy, instant transactions, and much greater scalability. In fact, lightning network boasts that it will be able to process over 100,000 transactions per second.
Bitcoin’s ecosystem is vastly larger and more diverse than it was during the currency’s last bubble, in 2013. Billions of dollars have been invested in Bitcoin companies, public acceptance of the currency is on the rise, and governments have begun (gently) regulating it. All of these point toward the direction of mass adoption.
The incredible potential enabled by SegWit’s adoption and the presumed end to Bitcoin’s three-year scalability debate also would tend to point toward continued price increases in the future.
It’s certainly possible that we are in one of Bitcoin’s last bubble cycles before mass adoption is achieved. If we are, and the price crashes, don’t expect it to last long. Bitcoin is rapidly coming into its own, and when mainstream acceptance finally occurs, it’s likely to make past bubbles look small.
Bitcoin Cash Hashrate Represents Nearly 10% of the Bitcoin Network
Cryptocurrency miners have ignored Bitcoin Cash for a long time. That is only normal, as the currency wasnât profitable by any means. Now that things are turning around, BCH is quickly getting more
Revain Deploys Blockchain to Improve User Reviews of Products, Services and Businesses
Revain, an Ethereum blockchain-based platform, rewards users for providing feedback on products, services and businesses. By using blockchain technology and artificial intelligence, Revain is designed
Indorse Utilizes Ethereum to Improve Social Networks and Online Reputation
Blockchain technology finally provides the tool that can allow social networks to reward users for their network contributions and at the same time give them complete control of how their personal dat
Bitcoin Price Weekly Analysis â Can BTC/USD Hold This
Bitcoin price failed to move above the $4475 level against the US Dollar, and BTC/USD is now trading near a major support area. Bitcoin price made a good ground this past week above $4000 against
Ethereum Price Technical Analysis – ETH/USD Remains Supported
Ethereum price corrected lower against the US Dollar and Bitcoin, but ETH/USD remains supported above $294 for more gains. Yesterday, we saw a decent rise in ETH price above the $302 level against
Bitcoin Cash Price Weekly Analysis â BCH/USD Monstrous Ride
Bitcoin cash price climbed higher sharply above $900 against the US Dollar. BCH/USD is currently in a monster uptrend, looking for more gains. The past two days were amazing for BCH price as it
Ethereum Price Weekly Analysis â Can ETH/USD Make It?
Ethereum price is consolidating in the bullish zone against the US Dollar and Bitcoin. ETH/USD must clear $317 for a new monthly high. This past week was mostly neutral for ETH price as it
Binance Announces a Platform Upgrade, to Introduce New Features
Binance is one of a kind cryptocurrency trading platform, created by genuine digital asset lovers led by Zhao Changpeng. The platform, having made a name for itself for the quality services is now