Are we still in a bubble?
On the basis, when prices started to rise dramatically around May time last year, current prices would suggest we are still very much in a bubble.
If, on 7th February 2017, you’d invested in almost any selection of coins available, then, having resolved to never look at any of those coins’ prices until today, you might, even if not actually believing it yourself, have accepted the view point of anybody who suggested that your year-on-year gain was evidence of a bubble, as having some basis.
In this hypothetical scenario, this is without even being aware of the lunacy of late November to the start of January.
And what of that lunacy?
Doge went nuts, even though it hasn’t had a software update in 2 years. It’s still up 255% on what it was 3 months ago. In fact, most coins are still well up on where they were in mid-November, before which there had already been several periods of sustained growth, leading many to call this all, at various points, a dangerous bubble.
The Electroneum Telegram channels are full of people who, even at 22 cents per coin on 6th January, a 2,200% increase over the ICO price many bought it at in just December, think the coin will go to $100 within a year, on the back of very little tangible evidence, and availability on just one exchange. This isn’t to knock Electroneum per se, but it’s evidence of the fact that across the sector there’s a huge amount of uneducated speculation that just wants to get rich quick, and believes it’ll happen in a paradigm where actually no equivalent value needs to be understood. This fuelled the bubble. Imagine, perhaps what the bubble might have been if exchanges, over that crazy month, had been able to process all requests for new accounts and the associated influx of fiat.
So, I think we are still in a bubble. Many people will have been burnt by what’s happened. Banks, who were too late to stop people investing what they couldn’t afford to lose, evidenced by the fact people were buying coins on credit, will take enough of an associated hit to ensure they push harder for regulation. But, if to an extent, that tempers wild speculation, that’s no bad thing.
And finally, while prices continue to fall, for those who have been investing for long enough; those who didn’t invest what they couldn’t afford to lose; those that took profits early and protected their capital; those that diversified, even if some of the diversification now makes it looks like they brought a lot of junk. Those people have a chance to really think about the fundamentals of the underlying blockchain based utility of what they brought into. An opportunity to reassess the value of those as products and services with genuine use cases. And all that while probably, still being in the black. Even if things look a great deal less rosy than they did just a month ago.
It’s from that which value will start to grow. In a more measured way. With those who have a need and responsibly to drive regulation where it makes sense, to this time, get their act together, alongside a community of developers who have, in pockets, some great ideas, which will fly.
There may still be some way before we find the bottom, but I think the last month has shown that anyone with a genuine interest in this sector has learnt a lot of useful things this last month which they’ll benefit from going forward.
