February 05, 2018 -- ADVFN Crypto NewsWire -- There have been a
number of times in Bitcoin’s history where people have thought that
mainstream adoption had happened. However, the lead up to
last December’s $20,000 high saw Bitcoin hit some really
big adoption milestones.
Through the memes and reports on mainstream news, Bitcoin was
the word on everyone's lips, and it was even near the
summit of Google searches. This saw a new breed of investor
entering the crypto community, but a dangerous one.
Moneymakers
The hype surrounding Bitcoin was all aimed at the
incredible growth that the digital currency had experienced since
it began less than 10 years ago. People were unable to keep away
from the chance to double, triple, and so on, their money in a
matter of weeks, rather than years as would be the case in normal
investments.
Everyone from pensioner to teenagers were joining the Bitcoin
craze with the hopes of making some money off their investment. The
actual technology, or even the way it worked, was hardly a
priority. These dangerous views of Bitcoin were now propping up a
value in the coin that was probably far too high, as it
smashed through the thousand dollar barriers with ease
through November and December.
A sobering correction
Bitcoin, having been founded by, and upon, people who believed
in the technology, and the potential to be a disruptive force to
challenge the banking industry, was now teetering on a pile of
uneducated speculators. People who were new to the scene were used
to only upward trends and huge returns yet they were not ready for
the crash.
As the crash began and is still going on, slicing off
more than half the value of Bitcoin, these same speculators
have been flushed out of the system. The sell off from such
investors has played a big part in the fall of Bitcoin price, but
it has shaken out more than just the so-called weak hands.
Good riddance
It may sting at the moment, for anyone who has decided to hang
out despite being at a loss, but those who remain probably have
more than a passing interest in the technology. The loss of the
mass speculators could be just what Bitcoin needs.
Last year people were buying up Bitcoin even with their
credit cards and other forms of debt. While this is easily
seen as a bad idea, for the person doing it, it is also a danger
for Bitcoin. There have been many financial crashes and bubbles in
markets that have begun with people getting foolish in their buying
and investing. This FOMO buying and hype have all the hallmarks of
a bubble.
Angela Walch, a law professor at St. Mary's University in
Texas who studies cryptocurrency and financial
stability, spoke to Vice about the speculative nature of
Bitcoin and its potential to turn into a bubble if silly decisions
keep flourishing. Some of the factors to consider when trying to
find a potential bubble are already evident according to Walch:
“Some of the hallmarks to me involve the FOMO idea—the fear of
missing out and never being able to get in. People see other people
making a lot of money and they just want in on it. The housing
bubble is a good example of that. People thought another person
would always want to buy their house from them at a higher
price.”
A safer space
If this latest correction has indeed gotten rid of these types
of investors, who are now running scared and stung from a falling
Bitcoin price, then all the better.
The long-term prospects for Bitcoin are better off, even if the
price is lower, without such investors. Again, this harks back to
the dotcom bubble where the hype around such companies caused it to
pop. But once that bubble had popped, the ecosystem grew back
bigger and better, as there is no saying that the Internet and
dotcom space are dead in 2018.
Author: Darryn Pollock