Around this time last year or the year before that, there was hardly any trending news that didn’t have Bitcoin in it? Now that nobody is talking about the currency that was to take over the world’s economy, very many questions remain unanswered. Was Bitcoin a bubble after all? Let’s say it wasn’t meant to last, was it the biggest bubble of all time? Let’s dig in!
Cryptocurrency bubble prediction by Hyman Minksy
A 20th-century economist known as Hyman Minksy is known to have been the first person to talk about the cryptocurrency bubble. Here is a sneak peek of his prediction’s framework.
He divided it into five stages:
- Displacement – New technology that would make lead investors believe that profits will rise
Boom – There will be a steady increase in the price, which will ultimately outpace the significant enhancements associated with tech porno.
- Euphoria – Prices will increase to unbelievable amounts as investors buy the asset because they think they will sell it at a high price in future.
- Profit-taking – Some investors will fear that the bubble might burst, and they will start harvesting profits. The less sophisticated investors that are newer in the market will be willing to purchase the asset during this stage.
- Panic – Prices will fall fast and hard since investors will start disposing of their assets. The plunge will increase if the investors took loans to buy the assets.
Although not all assets obey the Minksy’s framework, it is pretty evident that bitcoin has taken this route.
Where it all started
When Bitcoin first hit the market, its prices skyrocketed in a few weeks, and then they dropped. They increased again, and this time nobody was willing to be left behind. So, everyone bought a share of the ‘big cake’ with the hope that they would profit from it. The demand was high, and the supply was low. It led other entrepreneurs to find their way into the market too. That’s how dozen other cryptocurrencies were launched.
Does bitcoin have a future?
For over two years now, we have seen dozens of predictions on how Bitcoin will flourish and why people should invest in it. By now, we know that these predictions were false. So, is there any future in cryptocurrency?
According to a paper published on Forbes in July 2019, the digital currency doesn’t have much hope. Panos Mourdoukoutas, who was the article’s contributor, said that prices might be on a roller coaster for a while. After that, Panos predicts that the currencies will either die on its own on being killed by the establishment of powerful banks and governments.
What is the way forward?
The public had attached a lot of hope on Bitcoin and other cryptocurrencies because they were to become global currencies. Although the ‘general public’ may have accepted Bitcoin as a standard medium of exchange, it must overcome several obstacles, such as stability, familiarity, and awareness. Unpredictability makes digital currencies like Bitcoin unpopular. Therefore, their chances of gaining broad adoption are slim, if none.