The Bitcoin bubble: Why speculative Bitcoin buy-ins now point to a disastrous Bitcoin crash -
Bitcoin is a powerful, game-changing crypto currency that may literally change the world. It’s a huge threat to centralized banks and government currency controls because it’s entirely decentralized, anonymous and virtually impossible to track. Bitcoin is the “underground railroad” of money, and it has an important role to play in the epic battle between liberty vs. slavery.
But because bitcoin is a currency whose value is based on the psychology of human beings, it is subject to booms and busts. Bitcoin has enjoyed a meteoric rise from roughly $20 per bitcoin in February to almost $200 per bitcoin today. (Yes, nearly a 1000% return in less than two months.) This has happened for several reasons, but primarily because the Cypriot bank thefts taught people that “money in the bank” isn’t any safer than money anywhere else. So why not invest in a crypto-currency that can’t be stolen by the banks?
As Europeans and Russians were funneling unprecedented sums of money into bitcoin over the past few months, Asians began to dump speculative money into the system. Today, Chinese investors (i.e. “gamblers”) are pumping huge sums of cash into bitcoin, hoping to double or triple their money as the currency continues its red hot rise.
Therein lies the problem. Bitcoin has become a speculative bubble now driven primarily by greed and risk rather than utilitarian value. More and more people are getting into bitcoin for no other reason than to jump on the bandwagon and hope to “buy low, sell high.”
Check out the chart below, derived from data at BitCoinCharts.com. Look familiar? It mirrors the dot-com bubble charts of the late 1990′s:
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