Bitcoin: The end of a speculative bubble ?
2018 is about to end badly for the queen of cryptocurrencies. The trend of this year is in sharp contrast with that of 2017 where the Bitcoin was in the spotlight for its continuous record after record, then the bubble burst. However, the underlying technology remains intact and the applications in various sectors will benefit all human kind.
Bitcoin: The end of a speculative bubble ?
In 2017, Bitcoin became a topic treated by all media giants and its starting to be a part of the lives of many people, even just out of curiosity. The quotations of the queen of digital currencies rose from the minimum values recorded at 752.46 dollars on 12 January 2017 to an absolute maximum reached the same year at 19.511 dollars on 18 December 2017, a stratospheric performance of 2492.96%.
The maximum price acceleration occurred, however, during the last two months of the year, where the digital currency recorded a + 248.10% progress up to the absolute tops recorded on 18 December from the lows marked on November 13th of $ 5,605. Precisely in this phase of strong bullish momentum the phenomenon of Bitcoin has been treated by all the major media and has attracted more and more small investors, but also simple people which hear for the first time of Blockchain and cryptocurrency.
Now arrived in mid-December some considerations can be drawn. This year will be remembered as the burst of the bubble that many claimed last year, when the digital currency milled record after record. From the tops scored in December, the Bitcoin has come to lose about 81% of the gains by settling below the round of $ 4,000. A psychologically important level for the media but also for financial market operators.
The general decline that has characterized this year was mainly due to the distrust of big investors with respect to this asset, mostly due to the excessive volatility of cryptocurrencies, a factor that can certainly allow huge gains if one is on the right side of the market, but which can be a problem in terms of risk management.
A possible solution to this would be the approval of an ETF by the SEC, a scenario that would increase liquidity, since institutional and retail investors would have a regulated instrument that would allow them to invest in a safe and efficient manner.
Investors, rightly, then wonder if it is still worthy to focus on the world of cryptocurrencies in a long-term perspective. The answer obviously is unknown, but surely the world of digital currencies have provided a new wave of technological innovation. The cryptocurrency industry has in fact allowed the emergence of new technologies such as the Blockchain.
It is actually the underlying technology of Bitcoin on which investors should focus. In the future we will certainly be talking about it for a long time, as there are many areas on which to apply it, especially in many sectors related to the economy.
Other applications will affect the safer data sharing and all those processes that require the intervention of an intermediary such as notarial deeds, the certification of digital identity, the payment of copyright, the more secure sharing of sensitive data.
As for the purely financial phenomenon, the Bitcoin may not be destined to disappear completely, but surely, the 2017-2018 biennium will be archived as the beginning and the end of the speculative bubble.
Exactly like that of the tulips of 1637, the first major financial crisis triggered by the use of financial instruments with speculative purposes, described even today in all the world's economy manuals.
