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History of Large Deflated Bubbles

Although I can be considered a "Technocrat Prospective Analyst" for the construction of future scenarios, I must clarify that I am not a Financial Analyst, therefore my assessments in this field may be plagued by many errors and subjective appreciation failures.

However, my financial memory is very good; In fact, I remember the 1997 financial crisis caused by "the Asian Tigers" and the sharp drop in the prices of their high-risk investments, which ended up burying millions of investors; 13 years later, the deblacle of the super-promoted excellent investments of the "Dot Com", considered at that time as the "commercial and investment future"; and in the most recent past (approximately 10 years ago), the "financial boom" was highly promoted, with gigantic investments in "high-risk garbage mortgages", labeled as the most profitable and safest in the world, and then sentenced as the great real estate scam.

In this sense, almost like a vicious circle, every so often a new scheme of "excellent" investments emerges, which grows and swells quickly like a big "bubble", and then burst irremediably.

The common factor in all these and in many other financial debacles, are the "giant speculators" and their large "swallows capitals", who normally invest monstrous amounts of money in an area or "globalized" entity to inflate to their taste those bubbles , playing with the "laws of supply and demand".

Then they pay for the necessary media promotions to attract millions of small investors who will continue to sustain and inflate the "bubble" even more, and once they reach a very high profit margin, they withdraw their "rude swallow capitals", causing the scandalous fall in the quotes of this entity (the bubble explodes) and the disbanded withdrawal of small investors, already lost.

Is Bitcoin a Bubble?

In this context, Bitcoin enters the scene, which in theory is an excellent digital cryptocurrency born in 2009, decentralized and without support or government control or any bank, "the utopia made reality."

Bitcoin is based on "mining" with a "Proof of Work" (PoW) scheme and for its cararaceristics it is called to be the future in many aspects, with the ability to change the world in financial and economic terms.

But, I have to analyze this cryptocurrency in terms of its numbers, statistics and history, which in some points are coincident with the great financial debacles that have occurred in the last 30 years.

First, it assesses whether Bitcoin meets the essential monetary requirements. In this sense, as a means of payment, it is complicated to use because of its high volatility, its minute-to-minute value being unpredictable, much less from one day to the next. Simplicely, because of that volatility, it is too risky and inaccurate to be used as a unit of account.

On the other hand, who dares to use Bitcoin as a currency for the reserve of value? Obviously, that is something that no one would dare, because at one point the Bitcoin can be worth $ 15,000, a few seconds rise to $ 17,000 and then fall to $ 13,000; absolute uncertainty of unpredictable ups and downs.

Although, apparently the curve has always to tend to the sustained growth by the limited supply of Bitcoins in the market, and to increase the demand, as it happens now, will increase its quotation; but on the other hand, a large holder can make a massive sale of Bitcoins at any time to cause its collapse almost immediately.

That is, the high volatility of Bitcoin prevents it from holding itself as a "currency" of ordinary course (currently it is very inconvenient to be used as a means of payment, reserve of value and unit of account), for which its current common management is like a "element" of investment, not as currency.

However, the debut of Bitcoin in the future markets has caused encouraging signs of stabilization in its quotation, for its later use as a "currency" of a stable course.

But, what really has made me inclined to include Bitcoin in the schemes of "Bubbles Investment" is its high dependence on the big "globalized speculators" and the huge masses of "swallows capital" that have monopolized the massive purchases of Bitcoins, and they are the ones who apparently control the zigzagging ups and downs in the Bitcoin's price.

In fact, they have made in recent days scandalous Bitcoin purchases to cause an undesirable exponential rise of almost 1,000% in less than two months, which could cause a natural collapse, which could be 20% to flatten the curve and make it more "real" for its sustained growth, as it should happen and not as it happens now.

In such terms, the other point that connects Bitcoin with the "Bubble Investments" is its limited supply that can not exceed 21 million "pieces", a number that although it seems contradictory is very small for the global money supply that is handle in these times; therefore, the highest percentage of the generated cryptocurrencies could be in the hands of very few investors who will have the main option of managing their price almost at will; including an eventual debacle in their quotation when they decide to sell all their monopolized cryptocurrencies.

Let's see an Example:

Assuming that the 21 million Bitcoins possible to be mined were activated, and the price of said cryptocurrency is at US $ 25,000, that would mean a monetary mass of Bitcoin investment of 525 billion US dollars; an amount that although it seems enormous is insignificant for the set of at least 1,000 millionaire speculators, who would control at least 90% of said cryptocurrency with an ideally equitable share of acquisition of 19 million Bitcoins (19 thousand Bitcoins for each of them) for a value of 475 billion US dollars (475 million would invest each of them).

In this sense, there would be 2 million Bitcoins for the millions of small investors for a total value of 50 billion US $. The problem lies in the "honesty" of the speculators and their "swallow capitals", who, by migrating to another new "profitable business", will propitiate the debacle in the price of said cryptocurrency (excess supply, price drop).

In short, the small investors will be those who, in that hypothetical scenario, will have in their hands the "Bubble" of Bitcoin (received from the hot hands of the speculators), and if a disbanding occurs due to psychological effect, on the part of the small investors , the bubble will explode; otherwise, millions of small investors will buy even low price (approximately 20% of its current value) with which BITCOIN WILL BE SAVED AND IN TRUTH WILL BE THE FUTURE IN MANY ASPECTS, AS APPEARED TO BE.

Final Tips

The first word I can think of saying is CAUTION! Be cautious because the numbers do not give very encouraging signals for Bitcoin; But I'm not saying that an impending Bitcoin debacle is coming. What is clear is that large "international swallows" are practically doing what they want with the price of this cryptocurrency, and even apparently have the power to decide their fate and future of "bubble" or not.

Second, I consider Bitcoin and most cryptocurrencies (if not all) as a high-risk investment scheme, suitable for lovers of betting, adrenaline and continuous risks, where you can win A lot of money overnight, but you can also lose everything in a matter of seconds.

If you consider yourself in this group, there is a great and exciting investment opportunity that can yield juicy profits. But, if you are not so daring, do not like risks or do not understand any of this, I recommend that you do not invest anything there, because most likely you will lose everything.

Clarification: Everything expressed here is my personal humble opinion, which I am issuing based on my "Free Will". I am not a "Financial Advisor"; therefore, any decision and risk that you take or not, will be your absolute responsibility.