Bitcoin Bubble: How to understand its real price?

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Last Updated on November 1, 2023 by Diana Kelley

In recent years, the rise of cryptocurrencies has captured the imagination of investors, tech enthusiasts, and the general public. With promises of decentralization, security, and potential astronomical returns, it’s no wonder that this digital form of currency has gained traction. One aspect that often leaves many puzzled is the volatility associated with crypto currencies and question about is Bitcoin bubble. However, you can still make money even if bitcoin falls. Read more about instant bitcoin loan on our blog.

Table Of Contents
  1. Some investors consider Bitcoin as a bubble
  2. Is Bitcoin overvalued: experts opinion
  3. Is there a Bitcoin bubble?
  4. Why Bitcoin is not a bubble
  5. Conclusion

Some investors consider Bitcoin as a bubble

Bitcoin bubble

With tulips in the 17th century and internet stocks in the late 1990s, financial bubbles can be seen throughout history. It’s difficult to distinguish a bubble from businesses that are simply volatile or growing fast until one pops. Despite its numerous bull runs, Bitcoin has suffered a number of steep price drops, including its dramatic fall from $70,000 to $19,000 in October 2022, among others.

Is Bitcoin overvalued: experts opinion

Negative

  1. In 2022, Buffett, Berkshire Hathaway’s longtime CEO and among the world’s wealthiest people, said he would not buy all of the bitcoins in the world for $25 at his annual shareholder meeting.  A company that sells products or services, Bitcoin doesn’t generate income for its owners. Bitcoin is not one of those things that can be valuable without producing value in the traditional sense, he said, because such situations are rare and do not apply to it. 
  2. The CEO of JPMorgan Chase told Congress in September 2022 that he was a “major skeptic” of cryptocurrency, he thinks Bitcoin bubble. “These are decentralized Ponzi schemes,” he said. “The notion that they are good for anyone is ridiculous.”

Positive

  1. As the founder of Twitter and the CEO of Block, a company that owns Cash App and Square and whose name is a play on the blockchain, Jack Dorsey has a long history in the technology and finance sector. In his view, Bitcoin is more important than anything else in his lifetime, he said at a Bitcoin conference in 2021. The value of Bitcoin, especially, stands out to him: “All the other cryptocurrencies don’t factor in at all.”
  2. As a billionaire venture capitalist, Marc Andreessen has been bullish on Bitcoin for years, having invented the first modern browser and later backed companies like Airbnb, Facebook, and Slack. In addition to Coinbase, his investment firm Andreessen Horowitz invests in dozens of cryptocurrency-related companies.

Is there a Bitcoin bubble?

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One of the factors that makes it challenging to determine the real value of Bitcoin is its decentralized nature. Unlike traditional currencies, there is no central authority governing its supply or setting its value. This lack of control can lead to price volatility and make it difficult to assess its true worth. Additionally, the speculative nature of Bitcoin’s market adds another layer of complexity. The constant speculation and trading activities can create price fluctuations that may not necessarily align with its intrinsic value. These two factors combined make determining Bitcoin’s real value a complex task for investors and analysts alike.

Why Bitcoin is not a bubble

Despite concerns about a potential Bitcoin bubble, investing in Bitcoin can still be a prudent decision. While it’s true that Bitcoin has experienced rapid and volatile price fluctuations, labeling it as a bubble oversimplifies the complex factors at play. The remarkable growth of Bitcoin over the past decade cannot solely be attributed to speculation. It has demonstrated its resilience and potential as a digital store of value. The limited supply of only 21 million coins adds scarcity and intrinsic value to Bitcoin, making it an enticing asset for long-term investment. 

Furthermore, Bitcoin’s decentralized nature offers a secure and transparent platform for transactions, reducing reliance on traditional financial intermediaries. As more businesses and institutions accept Bitcoin, its mainstream adoption increases, boosting its value beyond mere speculative bubbles. It is crucial, however, for investors to conduct thorough research, exercise caution, and adopt a long-term perspective when investing in Bitcoin or any other asset. 

Moreover, one interesting aspect of Bitcoin’s potential is its ability to facilitate real estate transactions. As cryptocurrencies gain wider acceptance, an increasing number of individuals and businesses are starting to explore the option of buying houses with crypto loans. This offers a level of convenience and security, as well as the potential for faster and more efficient transactions. 

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Conclusion

Bitcoin volatility, while a characteristic of this emerging asset class, should not deter potential investors or enthusiasts. By understanding its causes, impacts, and employing sound strategies, individuals can navigate the storm and potentially benefit from the long-term potential that cryptocurrencies offer. As the sector matures and regulatory frameworks gain clarity, it is expected that volatility will gradually decrease, making it a more stable investment avenue. And if you want to know about bitcoin loans, read more here.

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Author

  • Hi, I'm Diana 🙂 My goal is to break down intricate topics into clear, understandable language, so my readers can easily grasp the transformative power of these technologies. I’m deeply inspired by the potential of Web3 to revolutionize the digital world and bring greater transparency, security, and freedom to the internet.

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