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Is cryptocurrency the greatest market bubble of all time?

greggles

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There are now thousands of cryptocurrencies out there and many have experienced astronomical gains in 2021. The market cap of Bitcoin alone is currently $1.24 trillion dollars.

I'll be the first to admit that I don't have a very good grasp on blockchain technology, but I am struggling to understand how many of these cryptocurrencies could become something that is used by ordinary people on an every day basis; especially when governments are trying to regulate them out of existence or further marginalise them.

So what exactly are these cryptocurrency market capitalisations based on? Here's a list of the top 20 cryptocurrencies as of today:

Cryptocurrencies_151121.png

Even #20 (ALGO) has a market capitalisation of almost $12.2 billion US dollars. I just don't get it. How could it possibly be worth that much? I have this very strong belief that when the cyptocurrency bubble eventually deflates there isn't going to be much left when the dust settles. We were here before in 1998 and 1999, and again five or six years later as the commodities bull market took hold. All bubbles end, and this one seems to me to be the biggest market bubble of all time.
 

StockyGuy

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I wish I could get past my maniacal hatred for this sector. I've never felt the concept had any real utility. The vast majority of the "currencies" are way too unstable to be trustworthy for any practical means of regular, everyday exchange.

If it is all (or almost all) a giant family of mutually-validating Ponzi scheme FOMO-driven bubbles from hell, some people will still make the money the losers surrender. It's tempting to play at trying to be one of the winners. However I hate it too much :p
 
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Is Bitcoin a bubble? With one country adopting it as its currency, El Salvador, it looks as if it will be only the first of... - probably not of many but several. Perhaps the only way out of poverty and worth the risk.
My own feeling, a guess, is that the Bitcoin price will eventually crash to US$250,000 after first reaching above US$800,000.

Do not dive into Bitcoin because of what is written above because it is probably rubbish - there you goes.
 

So_Cynical

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Is cryptocurrency the greatest market bubble of all time? Yes absolutely, 500 bucks in BTC a little over decade ago is now worth 36 million,
and its still about as useless then as it is now, fantastic investment but a failure as a currency. The technology behind it (Blockchain) on the other hand is brilliant and has many genuine applications.
 

So_Cynical

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Found one thats new to me.

POWR - Power Ledger, this is an Aussie Crypto, (there's just so many of these things), at least this one kind of makes some sense???

Power Ledger (POWR) is an Australian blockchain-based cryptocurrency and energy trading platform that allows for decentralized selling and buying of renewable energy. The platform provides consumers with access to a variety of energy markets around the globe and is meant to be scalable to various energy infrastructures and regulations. The market is based on a dual-token ecosystem operating on two blockchain layers, POWR and Sparkz.

 
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A key point to realise is that blockchain is a technology and cryptocurrencies are one use of it but only one.

Blockchain itself is potentially useful even if cryptocurrencies completely disappeared. They're one use of it but that's all they are, one particular use of a technology.

As for whether it's a bubble, well I think it's safe to say that the majority of cryptocurrencies will cease to exist at some point. There's simply far too many of them for them all to end up useful as actual currency for making real transactions. :2twocents
 
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Is cryptocurrency the greatest market bubble of all time? Yes absolutely, 500 bucks in BTC a little over decade ago is now worth 36 million,
and its still about as useless then as it is now, fantastic investment but a failure as a currency. The technology behind it (Blockchain) on the other hand is brilliant and has many genuine applications.
Because Bitcoin in particular is priced in USDs it can't really succeed as a currency. However, what happens if the worm turns and dollars are priced in Bitcoin. Go into a shop and you're told this costs 0.0002 Bitcoin and I cant accept USD or AUD as it fluctuates in value too much.
 
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All bubbles end, and this one seems to me to be the biggest market bubble of all time.
The key point, all speculative bubbles end in a crash. FOMO, hype and irrational speculation are driving the crypto markets. It's made a fortune for some traders who timed their entries and exits but hodlers will get burned by the churn. Crypto does resemble a casino with the difference being you know the odds in advance in a casino. Labelling any crypto a currency is only correct in the context they are backed by nothing of value (excluding stable coins). The store of value arguments are just farcical. When the music will stops so will all the hubris and mania around tokens named after dog breeds.
 

So_Cynical

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Because Bitcoin in particular is priced in USDs
Its traded as a pair in USD and many other currency's, not hard linked to anything other than the cost to produce and clear transactions, the cost of Electricity and Graphic chips.
 
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The key point, all speculative bubbles end in a crash. FOMO, hype and irrational speculation are driving the crypto markets. It's made a fortune for some traders who timed their entries and exits but hodlers will get burned by the churn. Crypto does resemble a casino with the difference being you know the odds in advance in a casino. Labelling any crypto a currency is only correct in the context they are backed by nothing of value (excluding stable coins). The store of value arguments are just farcical. When the music will stops so will all the hubris and mania around tokens named after dog breeds.
Sadly "stable coins" are just as ephemeral as Crypto currency. The theory is that stable coins are backed with real dollars. In that sense punters buy stable coins and then use them to trade in crypto currency. This is exactly like buying chips in a casino.

However... What is all the Chips suddenly became worthless ? When you tried to cash them in there was no money in the cashiers office?

I also believe the Crypto craze is diabolical. I found a couple of stories around the "stable coin" Tether that I posted on the main Crypto currency thread. IMV it's hair raising.

This a clear and present danger to the whole financial system. How it's deflated safely - before the grenade goes off- is the Trillion dollar question.

The question of whether Tether is a fraud, then, matters less than the questions that animate so much crypto trading: Can I make money from it? Is the gamble worth it?

A prominent Tether critic who goes by the pseudonym Bitfinex’ed defined Tether’s profound risk by way of a vivid thought experiment. “I’m going to give you a grenade, and this grenade has a random timer,” he said. “It could be 30 seconds. It could be six months. I’m going to pull the pin. And for every 10 seconds you hold that grenade, I’m going to give you a thousand bucks in cash. How long are you going to hold the grenade for?”


the-tether-scandal-the-biggest-threat-to-the-crypto-ecosystem-23a169003205
 
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Its traded as a pair in USD and many other currency's, not hard linked to anything other than the cost to produce and clear transactions, the cost of Electricity and Graphic chips.
Also clearing a transaction is potentially a taxable event when selling crypto and realizing a profit. If you follow Mike Saylor and other maximalists though, the point is to hodl not sell, in the context of Bitcoin. So why make a big deal out of an impoverished, dollarized 3rd world country using Bitcoin as legal tender if you should hodl? Mixed messaging at the very least.
 

greggles

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Thanks for the views. Very interesting reading. It's good to know I'm not alone in my views about cryptocurrencies. It is hard to see any real utility in most (if not all) of them, not to mention fundamental value.

So when the time comes, what would be the best way to short cryptocurrencies? My guess is the mania will continue throughout the silly season and into 2022, but it is very likely that sometime next year it will all come crashing down.
 
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Thanks for the views. Very interesting reading. It's good to know I'm not alone in my views about cryptocurrencies. It is hard to see any real utility in most (if not all) of them, not to mention fundamental value.

So when the time comes, what would be the best way to short cryptocurrencies? My guess is the mania will continue throughout the silly season and into 2022, but it is very likely that sometime next year it will all come crashing down.
Interesting idea... I wonder who will fund the counter position on a Crypto short ? And would they survive the crash ?

Go back to US 2005-6-7 . At that stage the biggest game in town was the property market with tranches of property debt being sold around the world to institutions wanting to make a dollar on the deal. A very small handful of investors analysed the US property market and decided it was heading for an all time bust. The documentary/movie "The Big Short" explores the situation and goes to the heart of the question - "Who are you betting against ? and "Will they pay up when the chips collapse ?"




 
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The amount of crap and misinformation or perhaps blatant spruking online is worrying and funny.

Once again I like to underline news.com.au is not real media however reaches far.

“I was in stocks for a while, probably about a year, and they made no where near as much cash as the crypto, the reward wasn’t as good,” he said.

“I feel like the voltality of stocks was a lot greater compared to bitcoin for instance and your alt coins fluctuate a little bit.”

Mind you this is under "investing" section too. This article pretty much sums up the crypto game and the motives behind the players who still claim its a "investment"


full article for a good laugh

 

Value Collector

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Is Bitcoin a bubble? With one country adopting it as its currency, El Salvador, it looks as if it will be only the first of... - probably not of many but several. Perhaps the only way out of poverty and worth the risk.
My own feeling, a guess, is that the Bitcoin price will eventually crash to US$250,000 after first reaching above US$800,000.

Do not dive into Bitcoin because of what is written above because it is probably rubbish - there you goes.
El Salvador aren’t really using it as a currency, their currency is the US Dollar, they have made Bitcoin “Legal Tender”, but transactions are carried out based on the US dollars.

Eg, prices are all still quoted in US dollars, and if you decide to transact in Bitcoin the price in Bitcoin will be based on whatever the conversion to US dollars is that day.

You can’t really say that Bitcoin is a currency until it is being used as the basis of the transaction.

Eg, until tenants are willing to sign a 12 month lease based on a fixed amount of Bitcoin, or an employer is willing to hirer you for a fixed hourly rate of Bitcoin, it’s not really the currency of the country.

If a 12 month lease was signed based on Bitcoin, there is a good chance either the tenant or the land lord would be screwed over, same with employer/employee relationship, it’s just to volatile to be a real functioning currency.
 
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Bitcoin has a big advantage over other cryptocurrencies and even fiat currencies such as the US dollar or the euro, as it protects against inflation over time. Unlike other currencies, the supply of bitcoin tokens is limited. Therefore, its popularity and price will only increase over time.
The price of bitcoin may experience short-term fluctuations, but in the long-term period, it will only rise.
 
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Not an actual crazy fan, but btc handed me a nice profit last fy (declared and taxed here) so a bit biased.
One area of crypto currencies often overlooked is the world wide side.
When paid in USD or other key currency but living in Australia, or any of smaller countries, any foreign exchange is hitting you badly.try to transfer USD here via CBA and be shocked.....
Btc and others allow you to do these fiat conversions for a very basic and small fee, much smaller than available to retail small fry.
Now think of the migrants sending money overseas or small business doing transnational business.this is the way to go.
So as long as not forbidden by local authorities, this has a very useful use and can ...could develop.
 
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