With lack of knowledge, people are starting to refer to Bitcoin as being in a bubble. This is because they believe that in the blink of an eye the Bitcoin market can crumble down and everyone can lose a whole lot of money. For people who trade Bitcoin and are clued up with the ins and outs, this statement doesn’t even come to their mind.
The term “bubble” doesn’t directly refer to the bubble that you blow. The word “bubble” in this case means that the Bitcoin movement in the market is too lively making it unpredictable. The Investopedia give a very detailed description of the term bubble:
“A bubble is an economic cycle characterized by the rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive selloff occurs, causing the bubble to deflate.”
Even some professionals have declared that Bitcoin is in a bubble, this is a false claim. The reason for this being far from the truth is that people see Bitcoin as a type of business or organization, but Bitcoin is far for anything like that, meaning that Bitcoin can never lose profitability or decline in the normal market.
Being familiar with how to trade Bitcoin you would automatically know that Bitcoin has no government backing and operates by a completely different type of trade law. This makes Bitcoin in a way immune to scams that can manipulate the market and cause Bitcoin to drop rapidly.
As normal stocks or commodities can increase in the market due to a number of factors such as marketplace lies, Bitcoin is something on its own. Cryptocurrencies like Bitcoin and Ethereum can increase in the market because of basically one thing, more and more people are starting to use this system in their everyday lives. As more people start to see Bitcoin as a permanent investment, so will the value increase in the market.
What is important to know is that Bitcoin is growing, and unlike anything else, Bitcoin will continue to climb without dropping into a downward trend. “The more people that continue to get involved with bitcoin, the higher the price will climb.” This is what the network effect is all about.
Supply and demand and other fundamental trading factors also play an enormous role in the Bitcoin market. Bitcoin being quite rare makes sit a very valuable type of cryptocurrency. The more people who want to buy Bitcoin the higher the price will be, adding another reason to why Bitcoin prices will keep climbing in the market.
It’s simple, more people are learning about what a great investment Bitcoin is, and more people want Bitcoin, resulting in a continuous price climb. What keeps Bitcoin so scares is the fact that unlike gold or currencies, Bitcoin is completely limited to 21 Multi-Level Marketing ever mined. Bitcoin mining is getting more and more difficult, as a result of the market being at a constant 80 percent of that number.
This will continue to add more value to Bitcoin which will also lead to a price increase.
The difference between people saying Bitcoin is in a bubble and the people saying it isn’t is literacy lack of knowledge. Believing that Bitcoin is in a bubble is seeing Bitcoin in the same way you see stocks or commodities in the market.
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