Investing

Do you think that bitcoin is a bubble?

  • Last Updated:
  • Dec 13th, 2017 2:28 pm
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Poll: Will bitcoin crash?

  • Total votes: 192. You have voted on this poll.
No
 
61
32%
Yes, to less than $6000 USD
 
27
14%
Yes, to less than $4000 USD
 
15
8%
Yes, to less than $2000 USD
 
7
4%
Yes, to less than $1500 USD
 
2
1%
Yes, to less than $1000 USD
 
28
15%
Yes, to less than $500 USD
 
6
3%
Yes, to less than $100 USD
 
46
24%
[OP]
Deal Addict
Jun 6, 2013
2209 posts
1592 upvotes
Toronto

Do you think that bitcoin is a bubble?

If you have been following the bitcoin price, you will realize that, the 5-year growth of bitcoin is almost 85000%.

something has to give, and when the market corrects in full force, it will be painful.

No, I am not saying this is an episode of Tulip mania. Bitcoin is definitely the future, but we have to differentiate long term potential and short term growth. We live in a world where exponential growth is simply not sustainable: value cannot be created, at an exponential speed, out of thin air, over a long period of time.

people are buying bitcoin and holding because they think it will go up, not because they have any real understanding of the fair value of bitcoin.

it has now turned into a self-fulfilling prophecy: financially illiterate people go in -> creates liquidity resistance due to classic "anchoring" (they have no sell threshold) that helps bitcoin survive shocks such as China ban and bitcoin cash fiasco -> more financially illiterate people go in as they see the short-term "survival and bounce back" as a sign of future growth.

and in the cycle of all of this, media plays an important role too in the sense that bad news are good news, i.e., even bad news will cause more people to find out about bitcoin and buy bitcoin, especially the financially illiterates, and good news are amazing news.

I, as a long time RFD poster, am putting my reputation on the line, and predicting that bitcoin will drop to less than $500 USD.
It's always good to be underestimated.---Donald Trump

I never downvote anyone and I try to help everyone.
147 replies
Deal Addict
Jun 27, 2007
3249 posts
533 upvotes
I would like to get some answers, if anyone could chime in
1. Bitcoin value, as I was told, underpinned by transaction volume. Trouble is, transactions are quite costly and take time to settle. Why would anyone spend more on money transfer unless you're avoiding tax?
2. Bitcoin is limited to 21M coins. Economy's size measured in Trillions. How does it scale? If new coins can be created out of thin air, how is it different from fiat?
After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!
Jr. Member
Mar 2, 2011
171 posts
32 upvotes
Toronto
Some say bubble. Some say price discovery. It certainly is a powerful tool of censorship resistant payment.

There are definitely a ton of speculators entering the market. As I see it, it is definitely in the "profit taking zone" if anyone bought few months to a year ago. Then again bitcoin has been surprising with its bounces. Ever since the ETF rejection it bounced hard several times. The bubble argument has been defeated several times with the bounces. So may be it really is price discovery with more people being educated in its potential. I am bullish long term in the whole of crypto market. This is the internet boom of our times. The tech is still extremely young.
Jr. Member
Mar 2, 2011
171 posts
32 upvotes
Toronto
dlhunter wrote:
Nov 16th, 2017 3:27 pm
I would like to get some answers, if anyone could chime in
1. Bitcoin value, as I was told, underpinned by transaction volume. Trouble is, transactions are quite costly and take time to settle. Why would anyone spend more on money transfer unless you're avoiding tax?
2. Bitcoin is limited to 21M coins. Economy's size measured in Trillions. How does it scale? If new coins can be created out of thin air, how is it different from fiat?
1) its value comes from its attributes. It is censorship resistant. No central party can control it. It can be divided many decimal points and recombined easily. It cannot be counterfeited due to the blockchain which is a distributed public ledger. Everyone in the network is a witness to a transaction. It is also hackproof due to it. It is scarce, which when combined with usefulness gives it natural value. I am sure there are others attributes i am missing

2) nothing is created out of thin air. It is mined. Which basically means loads of computer power is being used to solve ever increasing difficult algorithm. When one is solved, bitcoin is rewarded. It requires immense amount of electricty and computing power.
Deal Addict
User avatar
Mar 16, 2010
1627 posts
707 upvotes
Hamilton
Glancealot wrote:
Nov 16th, 2017 2:42 pm
If you have been following the bitcoin price, you will realize that, the 5-year growth of bitcoin is almost 85000%.

something has to give, and when the market corrects in full force, it will be painful.

No, I am not saying this is an episode of Tulip mania. Bitcoin is definitely the future, but we have to differentiate long term potential and short term growth. We live in a world where exponential growth is simply not sustainable: value cannot be created, at an exponential speed, out of thin air, over a long period of time.

people are buying bitcoin and holding because they think it will go up, not because they have any real understanding of the fair value of bitcoin.

it has now turned into a self-fulfilling prophecy: financially illiterate people go in -> creates liquidity resistance due to classic "anchoring" (they have no sell threshold) that helps bitcoin survive shocks such as China ban and bitcoin cash fiasco -> more financially illiterate people go in as they see the short-term "survival and bounce back" as a sign of future growth.

and in the cycle of all of this, media plays an important role too in the sense that bad news are good news, i.e., even bad news will cause more people to find out about bitcoin and buy bitcoin, especially the financially illiterates, and good news are amazing news.

I, as a long time RFD poster, am putting my reputation on the line, and predicting that bitcoin will drop to less than $500 USD.
Jamie Dimon couldn't even sink bitcoin, your reputation won't help you Face With Stuck-out Tongue And Tightly-closed Eyes

I think at this point, almost everyone knows about bitcoin. My dad, who I use as a proxy as a "last to know" kind of investor (wanted to buy Enron, Bre-X, Nortel, Blackberry) had mentioned bitcoin to me the other day.

On the other hand, Square's announcement certainly bounced it out of its funk, so there's positive momentum at the moment. It could hit $0 or $1,000,000, who knows.
Member
Apr 22, 2014
457 posts
211 upvotes
Edmonton, AB
Glancealot wrote:
Nov 16th, 2017 2:42 pm
Bitcoin is definitely the future, but we have to differentiate long term potential and short term growth.
If Bitcoin is "definitely the future" and there is a limited amount of Bitcoin that can be produced and a whole bunch of it already lost forever, wouldn't simple economics say that the price has to increase as the demand does?

I'm not being argumentative, just posing the question.
Newbie
Dec 25, 2015
30 posts
9 upvotes
Canada
If you calculate total payment volume, it is a mere fraction (I think 0.01%) of what V/MA does on an annual basis, yet almost has the same market cap.

That should put the nail in the coffin for the bull case. This will all end badly, but still think we're 04 in the bull cycle. Probably another 2-3 years , so think Bitcoin goes to $30,000 before falling back down to reality (e.g. $0).
Deal Addict
Jul 11, 2008
4160 posts
1374 upvotes
You have no reputation to speak of. Don't embarrass yourself.
Sr. Member
User avatar
Dec 16, 2015
723 posts
324 upvotes
Canada
$1,000,000,000,000/24,000,000 = 41,666.6667 US$
Deal Addict
Jul 11, 2008
4160 posts
1374 upvotes
If you want to make a prop bet for bitcoin going to 500$ vs. staying above 5000$ after 3 years today, for 100k, i'm in.
We'll get the lawyers and formalize it.
Deal Addict
Jun 27, 2007
3249 posts
533 upvotes
samin62 wrote:
Nov 16th, 2017 3:47 pm
1) its value comes from its attributes. It is censorship resistant. No central party can control it. It can be divided many decimal points and recombined easily. It cannot be counterfeited due to the blockchain which is a distributed public ledger. Everyone in the network is a witness to a transaction. It is also hackproof due to it. It is scarce, which when combined with usefulness gives it natural value. I am sure there are others attributes i am missing
neither gold nor diamonds are used in global trade, even though both are scarce and cannot be counterfeited nor hacked.
with crazy volatility, bitcoin will never be anything but speculation play. with the high cost of transaction, bitcoin cannot be widely used unless you are in money laundering business or avoiding taxation.
censorship resistant? No central party? Don't you think electronic wallet cannot be seized by the governments? There is no jurisdiction on this planet that is not part of some government.
samin62 wrote:
Nov 16th, 2017 3:47 pm
2) nothing is created out of thin air. It is mined. Which basically means loads of computer power is being used to solve ever increasing difficult algorithm. When one is solved, bitcoin is rewarded. It requires immense amount of electricty and computing power.
lol. Dollars are printed, does it mean they are not created out of thin air? What's the cost of producing one bitcoin? Is it $6000? $40000? Or close to $200?
Everything above the value is extrinsic value aka premium.
After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!
Deal Expert
User avatar
Oct 26, 2003
27317 posts
1778 upvotes
Winnipeg
crypto is the true freedom dollar, not like the fake trump dollar that the Merican so proud of.
Deal Addict
User avatar
May 11, 2014
1703 posts
716 upvotes
Iqaluit, NT
My 2 cents....

I actually generally understand the system that bitcoin and other cryptocurrencies are based on. I understand the reason of having cryptocurrencies.

What I don't understand is the current value proposition that the currency has. The fact that people are viewing a form of currency as an investment is already troubling. Not a single person could explain the value proposition of why the currency will continue to increase in price. it isn't as if bitcoin in itself is going to produce value. Even if this wasn't an issue, what is it to say that Bitcoin will be the sole cryptocurrency increasing in value? The only reason it has is because it is the first most established one and people are piling in. When people who have no knowledge of investing, let alone personal finances is now borrowing money to speculate, I get very concerned. I have heard two cleaning staff at my hospital now withdraw their savings to speculate in bitcoin and weed stocks. At least in weed stocks, there is a "possible future business" backing the shares.

Bitcoin may continue to increase in price, but until when? No-one has sufficiently told me what the value of a single bitcoin should be and what the value is backed up by. It is very possible to make money. This is a textbook case of needing to be fearful when others are greedy. If you are playing with bitcoin, do only so with money you can afford to lose. I will take my sub 10~20% returns I have had with some stocks and sleep easily at night.
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Banned
Apr 2, 2017
4 posts
It might be ahead of itself now. When it was about 10k cad a few weeks ago, I told some friends to buy at 5700 CAD as I thought it moved up too fast. I had my grand uncle in the states put in buy orders at 5800 5900 6000 and he picked some up for long term hodl.

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