As Bitcoin Rises, Some Analysts Warn We Are Seeing A Bubble About To Burst
In recent weeks, we’ve seen Bitcoin’s value rise dramatically. The world’s leading cryptocurrency recently broke 10,000 and has been on the rise ever since topping $19,000. Unfortunately, one of the main issues with Bitcoin is its volatility and the value of the coin fell by about 20 percent after reaching those lofty heights of $19,000.
Currently, the coin is sitting at $16,425 which is still much higher than it was even a month ago. The coin’s sudden and dramatic rise has even prompted major investors to start taking the coin seriously which is certainly a milestone in terms of credibility.
However, some worry that we may be seeing the beginning of a Bitcoin bubble. Brian Kelly of BK Capital Management compared the rise of cryptocurrencies to the dot-com boom of the 1990s warning that there will be at least a few failures along the way.
“If you look at the internet in 1995, that’s where you are in digital currencies,” Kelly told CNBC.
Kelly didn’t call out any particular cryptocurrency, but did warn that we would see at least one “Pets.com.” Often cited as the premier example of the 1990s internet bubble, Pets.com went bankrupt in 2000 shortly after raising $100 million in its public offering.
However, not everyone is so sure of Kelly’s concerns. Mark Newton, of Newton Advisers, told his clients that he didn’t think we had quite reached the point of an imminent crash.
“It goes without saying that prices have reached a level where sentiment is exhibiting short-term euphoria,” he wrote in his note to clients. “But to think prices are at mania levels where this could suffer a serious crash here… is a bit ridiculous.”
“I truly don’t think people are involved on a mass scale yet. We’ve heard the fraud claims. Now we need people profiting immensely all around us and making forecasts for $1 million, etc., for it to truly have reached a euphoric peak.”
For now, it’s difficult to tell what the future of Bitcoin holds. The cryptocurrency began the year valued at less than $1,000 so it is understandable that some investors are wary of its rapid growth. However, it’s worth noting that even with its sudden drop, the coin is still worth more than 15 times what it was at the beginning of the year.
Eric is an avid tech junkie, gamer, and comic fan. When he's not working on his PC, you'll find him at your local comic book shop.