Over the past few weeks many investors have seen the price of cryptocurrencies tumble, and with only a minimal recovery. This has many worried that the entire cryptocurrency market is nothing more than a crypto bubble.
For a lot who say yes, they are comparing the drop in the value of all cryptocurrencies to the dot.com bubble, however, this is an unfair comparison.
Bubbles do happen more often than we know, but they are not as big news as BTC has been since it reached the highs of 20k. What is has highlighted is there was too much investor confidence, and there wasn’t enough support from the underlying market.
Over the past year, the number of companies who have been working at using the blockchain technology for various applications has increased. BTC is the payment system for this foresaid technology.
It might be the case that the investment should be in these underlying technologies than the coins themselves. For all these technologies and applications to work, there has to be a method of payment.
A bitcoin crash might only be a temporary thing as the blockchain usage will need longer to mature and for larger companies to implement.
Bitcoin Bubble Reality or Fallacy?
When anyone asks is cryptocurrency a bubble, they are not looking at the entire picture. As mentioned, for even any cryptocurrency to exist there needs to be the technology runs on.
Hence the blockchain. It is true there are many cryptocurrencies which have jumped on the bandwagon and crashed more.
Over the coming months or the next couple of years, a lot of these wannabe cryptocurrencies should vanish as they offer nothing of benefit to users.
Rather than assuming bitcoin is dead investors should spend some time weeding out the cryptocurrencies which make no sense and then make their cryptocurrency comparison.
The dot.com crash left with it, a great deal of infrastructure such as fibre-optic networking as well as much more, however, since BTC dropped in value, there’s been no mention of anything similar being left. All has been spoken about is the financial casualties which happened.
There is the possibility that BTC and all the others could be a bubble in its own specific way. It is nothing like has gone before, and to a certain effect, there is nothing materialistic about BTC or the blockchain.
A bubble would appear to be a significant crash in value to a level where investors think it will never recover from.
Taking BTC as the primary example and its past trading history, it has seen significant price drops before. Each time this has happened, it has recovered. The bitcoin price history should be used as an example of how robust it is to weather the storms of financial trading.
What unskilled investors do is look at the prices that BTC reaches, and if it doesn’t match, they say it is the effects of the bubble.
What it is, in fact, is, there was too much investment by the want to get rich quick brigade. For some, it worked well while others arrived late, or missed the peak of when to sell and they found themselves back at square one with their investment.
ETF’s and Beyond
With everything being said, it is hard for many people to decide which way the fate of Cryptocurrencies will go. Were they right and it was a bubble, or is there still a chance and an investment opportunity.
As I mentioned earlier in the article, many investors have had their focus on the coins when in fact they should have focused more on the blockchain. This is where the real action is at for any cryptocurrency and for real investors.
Significant trading was made against BTC over the last year, but that will pale into insignificance once investors have seen the effects of what the blockchain can do.
A lot of the problem seems to be cryptocurrencies, and the blockchain is regarded as one. They are also not seen as being related to each other. They should, in fact, be treated as two separate entities, and invested upon as a result of their own performance.
There is now a lot happening with a Cryptocurrency ETF since some of the regulatory red-tape has been sorted out.
Companies who have been developing their applications and blockchain technologies will see how they can affect the crypto climate. This level will be the unsung heroes as they are out of sight and doing their thing.
This goes as far as the government who have qualms with cryptocurrencies. The blockchain is a technology which compared to a bunch of numbers does have something tangible of which to invest in.
If anyone asks, there isn’t a crypto-bubble, all that has happened is the coins values have been adjusted, and the focus has moved to the technology which is powering the coins.