With the incredible rise in the price of Bitcoin this year the number of people coming out and warning that Bitcoin is nothing more than a bubble in imminent danger of bursting at any time seems to increase daily. Many of them claim Bitcoin is a fraud, there is nothing to it, it's nothing but a fad which will pass, and they compare Bitcoin's rise to price bubbles in the past.
One of the most outspoken critics of Bitcoin has been the CEO of JP Morgan Chase, Jamie Dimon. Mr. Dimon said bitcoin was a "fraud" that's "just not a real thing" and "eventually it will be closed". At one point Mr. Dimon, during an earnings call stated that he was not going to talk about Bitcoin anymore but the very next day he said: "If you are stupid enough to buy it, you will pay the price for it one day". I guess he couldn't resist one more jab.
Another noteworthy naysayer has been Oaktree Capital's, Howard Marks who said digital currencies "are not real" and are "nothing but an unfounded fad" in a memo in late July. "It is my firm view that the ability of these things to gain acceptance is just one more proof of the prevalence today of financial naivete, willing risk-taking, and wishful thinking," Marks continued. I believe that it is worth noting that the most outspoken of these critics have come from government, members of central banks around the world, economists and those in the traditional financial system.
Now I would never claim to be an expert in blockchain technology or Bitcoin but with the amount of research I have done, even I can recognize that there is much more to it than meets the eye. I have heard many of the critics say they don't know what Bitcoin or the blockchain is or that they just do not understand it. So my question to them is how can you criticize something if you do not know what it is or you do not understand it? I am also not really surprised that many of these people would be critical, on the contrary, I would be surprised if they came out in support of Bitcoin after all Bitcoin is starting to become a very disruptive force which threatens the bottom lines of many banks.
Although I strongly disagree with those who claim Bitcoin is a fraud and that there is nothing to it. I also am not blinded by Bitcoin, I understand that there are no guarantees that Bitcoin will succeed, it is very possible that another cryptocurrency could overtake Bitcoin as the king of cryptocurrencies. It is, however, my opinion that the world is moving slowly to a cashless society and that cryptocurrencies will play a major role.
Many critics also base their criticisms on nothing more than Bitcoins price. While I will agree that the price appreciation, especially lately seems crazy and unsustainable, I in no way agree that Bitcoin is destined for a total collapse from which it will never recover. Bitcoin and most cryptocurrencies, in general, have been very volatile, with quick price surges followed by severe price corrections. By my count Bitcoin alone has had five to six price corrections just in 2017 that were greater than 30%. The volatility is just something that you have to expect and except if you are going to be involved with cryptocurrencies. I have been involved in the financial markets for over 12 years and I have never seen an asset appreciate in value at the rate that Bitcoin has, it seems to defy the traditional rules and at times it seems to defy gravity. When you take a long-term view of the price chart, Bitcoins price now seems to be going straight up.
But can you really compare the price action of Bitcoin to that of traditional assets? Bitcoin and the whole cryptocurrency revolution that seems to pick up speed daily is like nothing this world has ever seen before. When you zoom into Bitcoins price there are several areas in the past where the price seems to go almost vertical for a period of time, kind of like we are seeing today.
Click on chart to expand
But when you look at the chart today that same massive looking spike higher is just a small little bump on the chart (circled area).
The price spike in the first chart was followed by a price correction but as you can see in the second chart the price recovered after a period of time and never looked back. So what if as crazy as the price chart looks today, in a year or so, it will be nothing but a little bump on the chart also. I do not doubt that we will see more volatility from Bitcoin and most likely some very severe price corrections but my opinion is that there will be anxious buyers waiting to buy up all the Bitcoin they can before the price takes off higher again. In closing, I will just say that it is my opinion that we cannot apply the traditional rules when it comes to Bitcoin price action because we are dealing with something very different here, something the world has never experienced before.
I hope you enjoyed this blog, please visit my website for more information on cryptocurrencies.
Until the next blog or video, Take care!
BigskyCrypto
email: info@bigskycrypto.com
website: https://www.bigskycrypto.com