Bitcoin Gone Wild
This last week or so has been incredible for bitcoin owners because the price of bitcoin has increased by an unbelievable 19% in just the last couple of days alone. That being said, the state of bitcoin is so volatile, even with these wildly high increases in the price of bitcoin, you should prepare for the eventual and inevitable collapse in the price as well.
As of Tuesday, May 30, bitcoin’s price was $2,250 in the United States, here we are on June 2, just three days later and it has increased by over $400 to $2,685. After that big jump, just hours later the price took an 11% dip down to $2,396. This is very common with bitcoin, which is why those in possession should not overact to the activity.
This steady movement really just means that the cryptocurrency industry is as popular and relevant as it’s ever been. In fact, the CEO of the bitcoin wallet Xapo, and member of the PayPayl board, Wences Casares, has predicted that the price of bitcoin could rise up to $1 million within the next five to ten years. While that prediction is very hard to believe for a multitude of reasons, Casares clearly has confidence that the market will continue to flourish.
With all of this being the case, we should take a look at the speculative bubble chart that Dr. Jean-Paul Rodrigue produced back in the day at Hofstra University in New York. Before we break that down that chart, a speculative bubble in regards to bitcoin is a spike in asset values of the bitcoin industry. It is typically caused by lofty and unrealistic expectations as far as the growth and price are concerned.
The chart indicates that what phase of growth that asset is in. There are four phases, and they begin with the stealth phase, then the awareness phase, then the mania phase, and finally the blow off phase. Bitcoin looks to be in the mania phase right now but if history teaches us anything, it’s that trends tell the bigger story. Bitcoin has experienced the mania phase three times since its inception but each time the exaggerated expectations have ended up being just that and the spike ends quickly.
BitcoinReview.com thinks these numbers are likely going to see a dip soon but again, the volatility is something that is tough to predict when discussing bitcoin. Who knows, maybe Casares will be right and the upward movement in bitcoin’s worth will continue to increase for years to come.