Bank of America: Bitcoin bubble has already burst
A group of researchers at Bank of America Merrill Lynch (BAML) said that Bitcoin is on the list of “greatest bubbles in history.”
Michael Hartnett, chief investment strategist and head of the research group, told Bloomberg that the BTC market, which has reached such heights and sifted by 60%, is a bubble that has already burst.
The Bank compared Bitcoin with the most famous financial manias: Lo System and the Company of the Southern Seas (18th century), gold, the Us Stock Market in 1929 and the Dutch Tulip Bubble of 1637.
The chart shows that Bitcoin is an example of the biggest rise in the price of an asset. At the peak of the cryptocurrency it cost 60 times more than 3 years before. At the same time, the price of tulips at the time increased only in 40 times.
Bitcoin peak was at $19 783 on December 17th, 2017. Now trading is carried out at the level of $6835.
The BAML chart shows that when famous historical bubbles burst, the price of the asset remains at its new, lower level.
However, Bitcoin does not go quite according to this scenario. What happened at the end of 2017 and the beginning of 2018 is not the largest bubble in world history, and not even the largest in the history of Bitcoin. In 2010 and 2011, the cryptocurrency exchange rate rose 120 times, to $11, before falling. Growth in 2013 and 2014 was also more significant than it is now.
Nevertheless, BAML writes that the comparison of the 2017 bubble with other bubbles can hardly be called fair, as much more capital was invested in 2017–2018 than in 2010–2011 and 2013–2014.
There is also a factor that complicates the comparison of Bitcoin with the stock market — capitalization. For example, in August 1929, the assets placed on the New York stock exchange, cost more than $1 trillion, taking into account inflation.
Reference — https://www.bloomberg.com/news/articles/2018-04-09/bitcoin-seen-popping-like-the-greatest-bubbles-by-bofa
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