'Bitcoin Bubble' Has Burst and All Crypto Will Die a 'Painful Death', Analyst Warns
The virtual currency market has been on a roller-coaster ride of sorts during the last four quarters, dealing with a very hostile environment dubbed “crypto winter” by bear market analysts for its crippling effect on the snowballing industry.
Bitcoin (BTC) has shed over 80 pct of its total current value and the crypto market has lost a whopping $400 billion in the last 12 months as its global appeal wanes and financial firms set in place strict measures to plod into bitcoin and other key cryptos on hold.
All this considered, the chief of global research for Bitwise Asset Management Matt Hougan has issued a rather disturbing warning: the bitcoin bubble has exploded.
A grim warning
In Masters in Business interview with Barry Ritholtz of Bloombert, Hougan said that:
“It was a massive run-up and a massive pullback … [It was a] total bubble. There are 2,000 cryptocurrencies out there; and 95 pct are useless and will die a painful death.”
According to Investopedia, a bitcoin bubble is “a surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive sell-off occurs.”
In a recent article, The Slant noted that “purchasing Bitcoins just because prices are soaring is the very definition of a bubble behavior.”
BTC has been on a consistent decline since it reached an all-time high of nearly $20,000 in December 2017, creating a massive sell-off and shut-down of many cryptocurrency and blockchain startups.
Bull run… temporarily
Bitcoin’s remarkable bull run that year was largely disregarded as expectations that big bank support for the crypto would soon arrive. As 2018 commenced and investment failed to materialize a sizable number of traders got disappointed and bailed out their virtual money investments.
But crypto investors should not be very worried as Hougan sees the bitcoin market’s recent advance and dive is reminiscent of the early 2000s dotcom bubble and comparing it to internet giants Microsoft (MSFT), Facebook (FB), and Amazon (AMZN).
Earlier this week, data shows that BTC is expected to hit rough waters again following five weekly successive price drops, with the crypto’s trading range hitting its narrowest since October last year, indicating a sudden retreat from over $6,000 to around $3,500 in just a few days.
(Jet Encila is a journalist, freelance writer and editor from the Philippines).
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