A very common question we’ve been getting from our readers and social followers is, “are we in a bubble?” and “is it safe to invest?”
No one really has the ability to answer these questions fully and with 100% confidence, but there are some things we can examine to determine whether crypto is in a bubble. The first thing I’d look at is the saturation of the market. Right now, crypto is an incredibly fringe investment for very few people. Sure, lots of people have heard of Bitcoin, but very few people have ever considered investing in it. And because of that, there are still billions of people that will be exposed to cryptocurrency and want to enter the market. So, I see the market continuing it’s growth for the foreseeable future on that merit alone.
Next, I would argue that with such a worldwide reach, the market is very dispersed and doesn’t have much centralization. Because of this, individual market forces in certain countries and geographies have very little influence on the crypto market as a whole. Remember, the 2008 financial meltdown was primarily driven by the US residential market. There is nothing like that in crypto right now. So, for that reason, I also think the bubble theory is disproved.
However, there are some concerns to be aware of. For instance, the Segwit2X fork that is coming up on November 16th. It literally has the ability to break Bitcoin. There are many things that could go wrong with it, and no one is quite sure how the blockchain will react to the hard fork. But because of this, I am wary of Bitcoin right now. And the continuing upheaval that is going on with the warring factions within Bitcoin gives me even more pause when considering an investment in BTC. For that reason, I’m much more bullish on ETH and other altcoins, but it doesn’t mean that they are better investments right now.
Also, to help illustrate what an isolated and dramatic bubble looks like, here is a comparison between Bitcoin and one of the most famous bubbles in history, the Tulip Bubble.