Crypto Monitoring the Crypto Bubble

Discussion in 'Other Asset Classes' started by Guest, 13th Dec, 2017.

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Where do you think we are in the crypto bubble?

  1. Very early (years left to run)

    22.1%
  2. Around the middle (could still run for months or a year)

    39.0%
  3. Very late (could end within days/weeks)

    24.7%
  4. It's not a bubble

    14.3%
  1. Guest

    Guest Guest

    I wrote a fairly extensive post / article on another forum and given the interest in cryptos here I hope you don't mind the repost and open it up to any discussion, observations or counter opinions :)

    -----------------------------------------

    Let me start by saying:
    • I sold 10 Bitcoins in 2012 at $35 each, so a bit salty on missing out on gains since :D
    • I have exposure to cryptocurrency with a position in IOTA at the moment (currently 500%+ in profit)
    • I thought Bitcoin was in a bubble at ~$100 back in 2013 & it went to $1000+ before bursting
    • I think Bitcoin could get to some of the "crazy" targets that people throw around (e.g. $100k+)
    • We will likely use the underlying technology in everyday life down the track (as I have been saying for years)
    • While I think it's in a bubble, I don't know if it's in the early or late stages (though my guess is closer to the end than the beginning)
    • A lot of people are talking about mass adoption of cryptos, but at the moment I see this as mass speculation (people are buying to make money, not their utility)
    I don't claim to know the future & have missed out on a lot of gains over 2017 staying out until recently, so take this as my opinion only (and an opinion that may change with time), not gospel or an attempt to belittle the opinion of others (you are welcome to your own!). If you have a different opinion on how it all plays out then feel free to share. I would ask that you consider all that I've written (don't just focus exclusively on the word bubble) and remain respectful in any discourse :)

    Also as a primer, I would recommend you read this article if you haven't already which clearly articulates how I see cryptos (both their strengths and weaknesses):

    A Letter to Jamie Dimon – Chain

    At the moment cryptos are slower, more expensive, less scalable, have a worse user experience and are more volatile with uncertain governance, than their centralised equivalents. This has the potential to improve over time, though I think there will always be pros and cons of centralised vs decentralised platforms.

    At this point it would be difficult for anyone to argue that we aren't in a crypto bubble. There are signs everywhere of irrational exuberance:
    Some additional tweets of mine for further context around my thoughts (though largely covered by the above):

    2340 on Twitter
    2340 on Twitter
    2340 on Twitter
    2340 on Twitter
    2340 on Twitter
    2340 on Twitter
    2340 on Twitter

    Some reasons the bubble could yet go much bigger:
    • The Dutch Tulip Mania in the 1600s was local with perhaps a few additional people from nearby countries, this is global and reasonably accessible to anyone with an internet connection
    • The Tech Bubble I understand was fairly US centric (280 companies in a Bloomberg Index reached a $3 trillion market cap), crypto is currently only worth around $500 billion, so could get larger
    • There are still a lot of people who don't own any crypto, but are talking about it or aware of it (who may yet buy)
    • There are still a lot of people who only own a small amount of crypto, but will build confidence (via recency bias) and could put in (a lot) more
    • A lot of the cryptos/tokens are very early in testing their technology, as it develops further and more traditional companies start testing it's utility, more people & investment capital may follow them in
    How I see it playing out over the years ahead:
    • The crypto bubble peaks (could be tomorrow or years from now)
    • 90%+ of cryptos disappear or fall to effectively 0 from nominal peak
    • Some exchanges which are probably working on fractionally reserved balances will collapse
    • The media will pickup on a lot of sob stories about people losing all their money in the crypto bubble
    • Cryptos that survive will still have massive declines in price (think Amazon from top of the 2000 bubble)
    • Development & improvements of the underlying technology in this space will continue regardless of the collapsing bubble
    • There will be a consolidation of people and teams into some very strong companies that stick around over the long term
    • The technology will eventually be mass 'adopted' rather than just speculated on, but like the Tech Bubble, it will be very difficult to have the foresight on those which make it through
    • We will only see a few different versions of crypto that are actively traded in the way they are now, not the 1300+ variants we have today (the technology will be around, just less visible, in the engine bay like an SQL database is now)
    Cryptos may not be past the peak as shown on the chart, but this is effectively the stages I see it going through and with peak of inflated expectations will come a peak price (the top of the bubble):

    [​IMG]

    Some important things to understand about all of the above:
    • Owning a crypto doesn't give you ownership of the underlying people, technology or company that is being developed (i.e. the token you buy may not survive even if the people involved in developing it end up very successful via their company or another project)
    • Despite the risks I would still encourage you to get learn about crypto and the underlying technology (as I have been since 2012), buy some if you like, just don't get too ahead of yourself, thinking you have all the answers or are suddenly an expert trader / investor just because you made some money in a bubble
    • Once the crypto bubble pops there is a strong possibility we won't see another one this manic for 15+ years (maybe not even again in our lifetimes). Take a small punt on a token so that you can tell your grandchildren you quintupled (or lost all) your $ in the great cryptocurrency bubble of 2017-2018
    • I personally invested a small amount of capital, so think there is a reasonable chance it gets even more insane from here
    • I may be very wrong about any or all of the above (as I said at the start, this is just my opinion)
    Even if you don't think it's a bubble, there are risks other than price e.g. exchanges getting hacked or you can lose your private key (if you store it yourself) which is effectively the same as permanently deleting your access to the wallet. So only put in what you are prepared to lose in it's entirety.

    I will try and add further observations over time :)
     
    Last edited by a moderator: 3rd Oct, 2021
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  2. hammer

    hammer Well-Known Member

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    @aussieB this is a must read....

    Nice post Guest !
     
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  3. Erica

    Erica Well-Known Member

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    Thanks for sharing your thoughts, some really interesting links there, loved A Letter to Jamie Dimon – Chain.

    I think buying crypto's, in a very simplified way, is just a new type of gambling. But we shouldn't under-estimate how much money worldwide is thrown into gambling. Australians bet about $20 billion per year on legal betting and worldwide it's more like $200 billion per yr.
    Australians spend more on gambling than people anywhere else

    So me thinks lots more money coming into the crypto horse race until we know which runner will be the winner.

    I've put a couple of bob on the top 20 horses just for giggles.
     
    Last edited by a moderator: 3rd Oct, 2021
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  4. Xenia

    Xenia Well-Known Member

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    What do people stand to gain by calling it a bubble?
    If you are not involved and have nothing to lose what do you gain from the negative speculation?

    Entertainment value?
     
  5. Guest

    Guest Guest

    If you had read the article, you would have seen that I am involved and have something to lose/gain.
    Please consider at least reading the post before arguing with it lol :D

    I think it's prudent to post these sorts of warnings so that those interested in participating in the market do not get carried away like many did in the tech bubble. I can't stop everyone, but hopefully those in the communities I like chatting with keep their heads on straight, make a little (or a lot of) money or worst case only lose a little rather than the shirt off their back.
     
    Last edited by a moderator: 13th Dec, 2017
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  6. Xenia

    Xenia Well-Known Member

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    I know!!! :D:D
    That was a general comment.
    People who are not interested in bitcoin are still very very interested.
     
    Last edited by a moderator: 10th Oct, 2021
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  7. Depreciator

    Depreciator Well-Known Member

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    Great observations.
    I bought some Ethereum 6 months ago via Coinbase and it has more than doubled in value. I didn't invest enough for it to be significant either way i.e. if it went nuts or collapsed. In your list of bubble signs, I fit firmly into this one:
    'People who don't understand the technology are investing in them.'
    But I find these things interesting and the best way to follow them is to have a bit of skin in the game. If I was more brave I would have dived in earlier to a few of them, but if I was that way disposed I probably also would have dived into property in a mining town.
    Scott
     
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  8. Beelzebub

    Beelzebub Well-Known Member

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    Because it's genuinely interesting and because this is a forum where ideas can be discussed.
     
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  9. Beelzebub

    Beelzebub Well-Known Member

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    A boy asked his Bitcoin investing dad for 1 bitcoin for his birthday

    The dad replied: What, you want $15,554? I can't afford that. $14,354 is way too much money for a birthday present. What do you need $17,274 for anyway?

    It's not a currency.
     
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  10. Alex Straker

    Alex Straker Financial Life Coach Business Member

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  11. Guest

    Guest Guest

    Tech bubble 2.0 for sure. When's the top?

    Long Island Iced Tea Soars 500% After Changing Its Name To Long Blockchain
     
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  12. vbplease

    vbplease Well-Known Member

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    My thoughts regarding whether it's in a bubble or not is whether the underlying technology will be used in everyday life?

    One of my biggest problems with it is there are so many different crypto currencies.. up to 10 x "alts" which are quite popular? How on earth can all of them be supported? I would have thought its success would be limited somewhat on supply? What's to stop an infinite number of these crypto currencies being made up?
     
    Last edited by a moderator: 10th Oct, 2021
  13. Guest

    Guest Guest

    Dogecoin Market Cap Hits $1 Billion, to Its Creator's Dismay - CoinDesk
     
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  14. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    If you look at the current state and number of large enterprise testing and adopting crypto technologies it is at its very infant stages.

    BTC is first iteration of crytpo. It has many many flaws and limitations. I personally cant see BTC continue long term as the new Alt coins offer much enhanced technologies that actually work in many real life industries and services.

    My personal view is crypto and ledger technologies have years to grow. If you look at it only towards the end of 2017 did the crypto hype really take off to the media/news and the general public.

    There are 1000s now so you need to pick the ones that will eventually end up widespread and used for example by Google/Amazon/Microsoft/VISA/Ebay etc....all the big boys.

    For IT guys like many of us on here its an advantage as we probably understand the technologies and its use cases ALOT more than someone say working in a customer service role. I can see the correct coins soaring bigtime - and from what I have seen the current growth is still tiny compared to what is possible when there becomes widespread adoption.
     
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  15. charttv

    charttv Well-Known Member

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    Last edited by a moderator: 10th Oct, 2021
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  16. Guest

    Guest Guest

    Ominous.

    upload_2018-1-17_9-36-53.png
     
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  17. Foxdan

    Foxdan Well-Known Member

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    Guest where is that chart from and what exactly is it tracking to make that chart?
     
    Last edited by a moderator: 10th Oct, 2021
  18. Harveys

    Harveys Well-Known Member

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    All Cryptocurrencies | CoinMarketCap

    Click on market cap top page for above graph.
     
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  19. Guest

    Guest Guest

    As per Harveys it is from coinmarketcap.com

    It is tracking the market cap of all cryptos (price x circulating supply), at least all those they have listed.
     
    Last edited by a moderator: 10th Oct, 2021
  20. Guest

    Guest Guest

    Comparison of Bitcoin corrections from 2013 & 2017 top
    (prices indexed to 100)

    [​IMG]