Bitcoin's no bubble and other people are finally starting to realize that
In a welcome article in Bloomberg today, I read a piece talking about how bitcoin may not actually be a bubble after all...
Gee, you think?!
I guess I can't be too mad at these people, they tend to try to fit everything into their basket and if it doesn't fit, well they make it fit.
I do applaud the author for finally coming to the realization that bitcoin may in fact not be a bubble after all but instead be a new asset class in price discovery mode pretty much since its inception.
Yep, that sounds like a much more accurate description to me.
While we are on the topic of bubbles, bitcoin has had 3 draw-downs of 80% or more in less than a 10 year stretch, and it survived to tell the tale:
Not many other assets can make that claim, which is one major difference that separates bitcoin from other so-called bubbles.
But wait, there's more...
Man Group, which is one of the largest publicly traded hedge funds in the world (and also the main author of the Bloomberg article I referenced), complied a list of some of the characteristics of some of the more popular bubbles through history...
As you will notice, bitcoin doesn't have a lot of similarities to many of them at this point...
As you can see, the average length of time for the entire bubbled period to last is roughly 6 years.
It takes on average 1,443 days to peak and 656 days to bottom.
Now, one could make the claim that bitcoin has smaller bubble periods with the broader context of an overall uptrend, but that is pretty much where the similarities end.
Bitcoin has basically gone from the lower left to the upper right ever since it was created and Man Group is finally starting to see the light as well, saying:
"Instead of considering each individual spike and fall as a discrete bubble, there may be more merit in the argument that this volatility is simply part of the price discovery in a new asset class, and that these are not bubbles, but part of a not-so-random walk that will eventually dwindle to give Bitcoin more stability, and ultimately, legitimacy.”
Hmm... you don't say.
We were way ahead of you Man Group, but it's nice to see you at the party. Better late than never. :)
Stay informed my friends.
-Doc