Of bulls, bears and bubbles: Historic high as Bitcoin hits $10 000
Bitcoin has just hit a huge milestone by reaching $10 000 per coin. Bitcoin is now worth more than $177 billion and the sum of all crypto assets is worth over $325 billion.
Because $10 000 was predicted, right here on The Sofia Globe on November 3, I’m going to take a close look at why the rise and what’s in store next for the price.
Will economic history look back at today and say the world has just changed, that the world is rethinking what money is? Or will it be the day that marked the bursting of a delusional, speculative, tulip bubble?
Where will this price bubble end?
Parabolic rises in Bitcoin have historically been followed by sharp corrections, often a 50 per cent retrace of the rise. The last big bull market rise to $1350 ended in a two-year bear market taking the price to lows that were just 10 per cent of the high.
Remember the period in the late 1990s when everyone from taxi drivers, builders, teachers, engineers, to doctors were buying Dotcom? And we know how that ended, with the 2001 Dotcom crash, with many stocks worth nothing. Prices fell so fast that few got out with anything.
On one hand, you should leave Bitcoin well alone – it will crash, if history repeats itself. But on the other hand, Bitcoin is not a stock; it’s a platform. Like Facebook’s platform, its value increases exponentially due to the network effect. That is, the more people that own and use it, the more valuable it becomes.
Trace Meyer, one of the longest and most consistently correct Bitcoin evangelists, believes that what we are witnessing is just the start of Bitcoin’s seven network effects — which are: Speculation, Merchant Adoption, Consumer Adoption, Security (through more miners), Developer Mindshare, Financialisation (e.g. SME Futures exchange) and Adoption as a World Reserve Currency. These seven network effects are taking root extremely fast and are exponentially reinforcing each other. He says “the technological dominance of Bitcoin is unrivalled”.
In the days and months that follow, we will see and hear more and more FUD (Fear Uncertainty and Doubt) in the mainstream news. Governments will want to ban Bitcoin for the safety of their people. While code is (free) speech, some authorities will see Bitcoin threatening the old world financial order. In some countries, exchanges could be closed down, as we saw recently in China. But I believe the decentralised nature of Bitcoin means that it will survive such setbacks and prove its anti-fragility and its immunity to attack.
Future price prediction
In spite of past history indicating a strong correction, I still think we have further upwards to go. Existing holders have learnt that to “hodl” and to have a “strong hand” in the price dips. The $12 000 mark is coming sooner than anyone would have dared to imagine, even just six months ago.
I see a greater understanding of the financial reality among more and more people. All assets bear risk, including fiat currency. Bitcoin’s landmark $10 000 price coincides with Bitcoin going mainstream. Millions of people around the world are deciding the destiny of Bitcoin. If it dominates the world, then $10 000 will look like a small blip in the biggest bull market the world has ever seen.
Disclaimer: This is an opinion piece and is not investment advice. You’re all big boys and girls and you know to never to invest any of your cash in Bitcoin or another crypto token that you can afford to lose all of it, without worrying. This is still one giant experiment and it could fail and is a space full of scammers and pumpers. Be smart and do your own research.
