Home Bitcoin Bitcoin Climbs as ‘Crypto Bubble’ Surges

Bitcoin Climbs as ‘Crypto Bubble’ Surges

Over the years, Adam Malolepshi has been refusing the urge to bet on cryptocurrencies, telling his friends that he is waiting on the bubble to burst.

Bitcoin Climbs as ‘Crypto Bubble’ Surges iBase Trading.
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Over the years, Adam Malolepshi has been refusing the urge to bet on cryptocurrencies, telling his friends that he is waiting on the bubble to burst.

Then, in mid-December, the infamous volatility bitcoin soared to its (then) high of $20,000. After that, Bitcoin broke new records almost every week. It crossed $30,000 shortly after New Year’s Eve. It hit $40,000 in less than a week. Finally, it was down 25% by the end of January (now rising sharply again). The size of this cryptocurrency bubble didn’t matter to a 26-year-old computer scientist who worked in finance. But he finally realized his fear of missing out (FOMO) two weeks ago.

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He then decided it was time to invest in Bitcoin, Dogecoin (for fun), Litecoin, Ethereum, XRP, Tron, and other small digital currencies.

The volatility is insane. It’s a market that’s home to just so many speculators that make it hard to determine what the price should be, Mr. Malolepszy told ABC News.

I’m sort of concerned I got in a little late, that I got in at the peak. Everyone’s overvalued it, and there’s going to be a correction.

Most players expressed their concerns over the past week as the Bitcoin price surged after Tesla said it had bought $1.5 billion worth of digital currency and would soon allow customers to buy electric vehicles with a highly volatile digital currency. Didn’t seem to share. However, Tesla does not disclose the number or price of Bitcoins purchased. On Tuesday night, Bitcoin surged to all-time highs ($50,585). However, it has declined again, trading around $49,115 in the AEDT on Wednesday morning.

I’m now starting to realize there’s some underlying value [in cryptocurrency] because so many people support it and believe there’s a future for digital currencies, Mr. Malolepszy said.

Overpowering ‘FOMO’

To some extent, fear of missing out has led Tesla to speculate on Bitcoin. It follows payment giant PayPal, which announced in October that it would allow users to buy and sell cryptocurrencies on its ubiquitous payment platform. The same month Square also announced that it had purchased 4,709 bitcoins for about $50 million. It was a huge amount at the time, but in retrospect, it is insignificant compared to Tesla’s $1.5 billion stakes.

But the nerdy Tesla CEO Elon Musk has made it clear that he sees cryptocurrencies as speculation. On February 7 (the night before Tesla announced its massive cryptocurrency bet), Musk drove up to dinner with his kids at an upscale West Hollywood steakhouse. Before he reached the front door, he was interrupted by a horde of enthusiastic fans demanding an autograph and bombarded him with questions about the cryptocurrency market.

The richest man in the world talked about bitcoin with a joke currency called dogecoin, which has grown about 900% since the beginning of the year. There are signs that Musk is worried that some of his fans may take his latest cryptocurrency joke as real investment advice.

People should not invest their life savings in cryptocurrency, to be precise — that’s unwise, Mr. Musk said, in his most explicit warning yet.

There’s a good chance that crypto is the future currency of Earth. It’s like, which one’s it’s going to be? Maybe it’ll be multiple.

It should be considered speculation at this point. So don’t go too far with the crypto speculation front.

Mainstream backers join the bandwagon

Mastercard is fully aware of the speculative nature of Bitcoin but sees it as an opportunity for expansion.

Whatever your opinions on cryptocurrencies — from a dyed-in-the-wool fanatic to utter skeptic — the fact remains that these digital assets are becoming a more critical part of the payments world, the credit card giant wrote on its website on February 10.

We are preparing right now for the future of crypto and payments, announcing that this year Mastercard will start supporting select cryptocurrencies directly on our network.

BNY Mellon, the oldest bank in the US, made another major cryptocurrency announcement last week. The company (formerly Bank of New York) has set up a new department to support buying, selling, and storing cryptocurrencies, the service said will be available later this year. Some optimistic forecasts from investment banks such as JP Morgan (expected to rise to $146,000 over the long term) and Citi (expected to reach $318,000 by year-end) boost Bitcoin’s value. Not a bad return on an asset that fell below $3,200 (from its peak around $19,000) when the first buy craze subsided about two or three years ago.

Over the past four months, the market value of all cryptocurrencies has exceeded $1.5 trillion, driven by the backing of Bitcoin by large US corporations. Bitcoins account for the majority of this amount, with a market cap of US$916 billion.

Bitcoin pub crawls

Despite the name, few use Bitcoin as a shopping currency. Most people stick with them, hoping that their values will continue to grow rapidly. Sydney bar owner Ben Shute believes high transaction fees are a major factor.

It costs about $10 to transact on bitcoin right now. So, it doesn’t make sense to buy a $10 beer when you have to pay $10 to transact.

He said it had been a long time since clients started using Bitcoin at Spawn Point, his own facility that could be the last bar in Sydney that accepts crypto payments.

I do remember a bitcoin pub crawl. It was like a social group for a while.

They only went to bars that accepted bitcoin, and they had one round of drinks, paid with bitcoin, and then moved onto the next bar that took bitcoin.

That was quite cool. I haven’t seen that for years, though.

Bitcoin proponents call it “digital gold.” This is because most of its buyers view cryptocurrencies as a store of value (despite sharp fluctuations in price). Art Gallery Director Ian Geraty suspects that many will buy Tesla cars with Bitcoin. Over the past few years, we have offered Bitcoin as a payment method to our international customers (US, UK, China, Japan) to provide additional payment options if they choose to use Bitcoin. However, no one ever bought a painting with Bitcoin from the Filter Fine Art gallery in Sydney.

It’s quite a niche method of payment. Not that many people have bitcoin at the moment, and art is quite a niche as well.

I’d be surprised if any artwork in Australia were paid for in cryptocurrency.

‘Digital gold’ in unstable times

Bitcoin’s growing popularity also coincides with a desperate attempt by governments and central banks around the world to get their economies out of the COVID-19 recession. They have lowered interest rates to zero (or negative territory) over the past 12 months, issued trillions of dollars in cash (also known as quantitative easing), and skyrocketed government debt. Investors are betting that the US government will soon boost further the US economy, which is worth up to $1.9 trillion. Bitcoin proponents have long been promoting the idea of digital gold, where the cryptocurrency acts as an inflation hedge. Caroline Bowler, head of Melbourne-based BTC Markets, said many factors play into it, particularly if we talk about [bitcoin] as a deflationary asset, said Caroline Bowler, the head of BTC Markets in Melbourne.

There’s also the knowledge that there will only be 21 million bitcoin that ever get mined.

It gives stability. Which is a nice counterpoint to the times we’re living in. Moreover, these are notoriously unstable at the moment.

She also said that the number of investors on cryptocurrency exchanges has increased by 20%.

We’ve certainly seen a buoyant market over the last six months, and it doesn’t look like it’s going away any time soon.

‘Silly behaviour’ abounds

Some market analysts warn that investors are seriously underestimating the risk of large-scale corrections to crypto portfolios.

We live in a huge global bubble in all financial assets at the moment. There’s a lot of silly behavior taking place, said Rabobank’s global strategist Michael Every, based in Singapore.

I really don’t think people are thinking this through as fully as they need to.

Too much of it is ‘FOMO’, or just chasing after a crowd. In the old days, if there was a queue, you tended to join it because you thought there might be something good at the end of it.

Everyone emphasized that while there is some risk that Bitcoin’s value could decline due to government decisions around the world, zero is not his prediction.

That risk is baked into the cake when you look at the political structure.

You actually have governors from the US Federal Reserve, European Central Bank, and several other major central banks either banning it already or saying. We think it’s being used for money laundering and criminal activity, and talking about introducing their digital coin.

He also said that some countries risk introducing their digital currencies in the future. It leads to an existential crisis for Bitcoin and other cryptocurrencies.

What’s the point of having a cryptocurrency? I think they would all want to control their one and have a monopoly over it.

And then you’ve got a far more significant downside risk once the price has gone even higher from here first.

“The views and opinions on this Crypto News Website are solely those of the authors and contributors. These views and opinions do not necessarily represent those of iBaseTrading or its partners.”

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Nicholas Martinez is passionate about making the crypto world more accessible by bringing the latest news to the space. He has a MBA in Business Analytics and has shown an interest in cryptocurrency from as far back as he can remember.