We have seen a small rise in the price of bitcoin over the last few days but that is far from a recovery. Just before Christmas, 2017, Bitcoin seemed unstoppable. Its value was rising exponentially as more and more investors piled in to the digital currency, hoping to profit from its sudden popularity. Other cryptocurrencies benefited too, as investors diversified their cryptocurrency holdings and arbitraged differences. Demand was so heavy that cryptocurrency exchanges crashed. Those who had held (or HODLed) cryptocurrencies for some time received the biggest Christmas present of their lives.
Professional investors and amateur traders alike predicted that Bitcoin’s price would increase even more in 2018. “Bitcoin will never crash,” said one Reddit user, “because then everyone would buy it when it’s much cheaper.” Like everyone buys the dips in a highly volatile high-yield market.
Others looked forward to universal adoption and a price tag in the millions. They might have trouble cashing in their windfall now, but that didn’t matter. Once everyone was using cryptocurrencies, fiat currency would be irrelevant and they would be the new super-rich. Some even started setting up a cryptocurrency Utopia in Puerto Rico, principally it seems to avoid the very large tax bills they would have to pay if they ever managed to convert their cryptocurrencies to dollars.
Even in January 2018, as Bitcoin’s price crashed to less than half its December value, Bitcoin enthusiasts were still optimistic, predicting that Bitcoin’s price could rise to as much as $100,000 by the end of the year.
But here we are in March, and Bitcoin is still hovering around $8,000 dollars. Bitcoin bears are saying it is a classic bubble bursting, and making dark remarks about the price going to zero. If they are right, then a lot of people stand to lose a lot of money. How much further will Bitcoin fall?
Well the pricing at the moment does seem to suggest that it will fall and the bubble may have already burst