Bitcoin Becomes an Asset of Financial Revolution or Just a Bubble?
NEW YORK – It has become a major investment and trend during the pandemic, including very intense Bitcoin. Some see it as a revolutionary asset that gives users control over their finances and increases the transparency of operations.
While the opinions were somewhat skeptical, they were pressured by price volatility and accusations of illegal use, which ultimately led them to consider the true value of Bitcoin.
Moreover, currently there is a financial bubble, which is also called a market bubble or economic bubble. An economic bubble occurs when asset prices rise quickly, but then fall just as quickly. Experts and even the general public already know what financial bubbles are, but these bubbles often only become known about their existence after they pop.
The strong characteristics of a financial bubble are, lack of fundamentals, instability, excessive risk taking, media excitement, and collapse. But for simplicity, buyers push the price up beyond the actual value of the asset. However, the bubbles that have formed are very complicated and difficult to untangle.
Bubble development consists of five stages:
1. Shift
This stage begins with major changes, such as the emergence of new technology or very low interest rates. For example, the decline in the federal funds rate from 6.5% to 1% (May 2000-June 2003) paved the way for the formation of a housing bubble.
2. Boom
Prices begin to rise, attracting more participants to the market and gaining widespread media attention.
3. Euphoria
During this phase, people are very excited and asset prices soar. For example, during the Japanese real estate bubble, land prices in Tokyo reached $139,000 per square foot (for comparison, they are now around $25,000).
4. Profit taking
Smart investors recognize the signs of a bubble about to burst and start selling their positions.
5. Panic
When a bubble pops, prices fall as everyone rushes to sell assets. This happened in October 2008 when major financial institutions collapsed and triggered a global market crash.
Does this apply to Bitcoin?
Bitcoin has had a complex journey. Bitcoin’s journey is quite complicated. Its emergence began more than 15 years ago with a mysterious creator named Satoshi Nakamoto, who introduced the concept in a nine-page white paper in October 2008.
Since then, cryptocurrencies have experienced ups and downs. Bitcoin is gaining recognition for its potential as an investment, hedge against inflation, and store of value. However, Bitcoin has also faced criticism for its use in illegal activities on the dark web.
Regulation is also a major obstacle for Bitcoin. Policymakers seek to prevent fraud and money laundering while supporting the industry’s growth, so they are trying to strike a balance between encouraging innovation and protecting consumers. And the regulations are getting clearer every year.
Bitcoin is a combination of two opposites: a still small, but quite popular, niche market; and polarizing, but compelling. Its development is also significant day by day because more and more people, businesses and governments are using it.
One area that is always busy is Bitcoin trading. However, if you are ready, Octa, a globally recognized broker, offers easily accessible trading tools and instruments to facilitate those of you who want to take part in this ever-evolving market.
With Octa, you can trade on weekends, and arrange your schedule flexibly. Additionally, you can trade from anywhere in the world, due to the borderless nature of cryptocurrencies.
Bubble development consists of five stages:
1. Shift
This stage begins with major changes, such as the emergence of new technology or very low interest rates. For example, the decrease in the federal funds rate from 6.5% to 1% (May 2000-June 2003) paved the way for the formation of a housing bubble.
2. Boom
Prices begin to rise, attracting more participants to the market and gaining widespread media attention.
3. Euphoria
During this phase, people are very excited and asset prices soar. For example, during the Japanese real estate bubble, land prices in Tokyo reached $139,000 per square foot (for comparison, they are now around $25,000).
4. Profit taking
Smart investors recognize the signs of a bubble about to burst and start selling their positions.
5. Panic
When a bubble pops, prices fall as everyone rushes to sell assets. This happened in October 2008 when major financial institutions collapsed and triggered a global market crash.
Does this apply to Bitcoin?
Bitcoin has had a complex journey. Bitcoin’s journey is quite complicated. Its emergence began more than 15 years ago with a mysterious creator named Satoshi Nakamoto, who introduced the concept in a nine-page white paper in October 2008.
Since then, cryptocurrencies have experienced ups and downs. Bitcoin is gaining recognition for its potential as an investment, hedge against inflation, and store of value. However, Bitcoin has also faced criticism for its use in illegal activities on the dark web.
Regulation is also a major obstacle for Bitcoin. Policymakers seek to prevent fraud and money laundering while supporting the industry’s growth, so they are trying to strike a balance between encouraging innovation and protecting consumers. And the regulations are getting clearer every year.
Bitcoin is a combination of two opposites: a still small, but quite popular, niche market; and polarizing, but compelling. Its development is also significant day by day because more and more people, businesses and governments are using it.
One area that is always busy is Bitcoin trading. However, if you are ready, Octa, a globally recognized broker, offers easily accessible trading tools and instruments to facilitate those of you who want to take part in this ever-evolving market.
With Octa, you can trade on weekends, and arrange your schedule flexibly. Plus, you can trade from anywhere in the world, due to the borderless nature of cryptocurrencies.