Has Bitcoin really gone bubble?

Accustomed in the last period to feel that in 2017 the Bitcoin went on the bill makes me understand that this market is still little known.

Yes, because this market is different from the others because:
  • It has no correlation with any market such as fiat currencies that are subject to government policies;
  • It is not subject to inflation when it is a limited good;
  • It cannot be controlled by anyone anonymously.

Based on these characteristics, Bitcoin has a very different structure from the main markets we know and this is what we notice if we take a graph of every type of market (Gold, NASDAQ, Apple, Usd-Eur, etc.) and superimpose them, we will notice a very interesting thing.

bitcoin a confronto

The first thing we notice is that compared to the other markets, the Bitcoin formed by the celestial line, has a movement very different from the others that have a rather flat trend, but it is not quite so.

Obviously the NASDAQ or gold market has a bullish trend which, however, is so underperforming compared to bitcoin that we feel it has a flat trend similar to the fiat currencies (purple line).

Looking at the graph we can say that Bitcoin is like being in a big bubble started from the beginning considering the performances that are comparable to a bubble.

Unfortunately we cannot have a more detailed analysis on the Bitcoin market when it is still very young compared to the others, but considering almost 10 years we can have an idea of this market.

The bubbles of the past

Bubble Dot-com and Subprime

bolle speculative precedenti

As we can see in this image, I am representing some of the last important bubbles of the past such as the DOT-Com of 2004 or the real estate market of 2008.

If you have noticed they have more or less a range between 600 and 400%, instead taking this’ other image we see the performance of bitcoin in detail.

Bitcoin market

bolle del bitcoin nel dettaglio

In this image I have identified several market phases, which make up the entire Bitcoin movement to date.

As we can see we can identify 3 main phases of the market, in which the range develops between 1200% and 8000%.

These phases can be defined as main bubbles or large bubbles, where in a few years or months even the price has exceeded incredible performace compared to the classic markets we know.

In fact, the phase at the beginning of 2013 reached 1780% at the end of 2013, 1271% that of 2017, 8290%, stratospheric numbers.

Comparing these numbers to the data of the bubbles that occurred in the past, we will note that the Bitcoin numbers are very different from the numbers we have in the past, this because the market is not correlated with the latter, as happens between the stock market and the commodity market so no correlation with anything.

We can say that bitcoin has already been on the bill three times using the terminology of finance and comparing the data we have, but it is not quite so.

If we look closely at the graph of the last figure we will notice that we can identify other minor phases that we can call them minor bubbles, in which the price has gone on the bubble but with lower performance compared to the Bitcoin market but significant compared to the traditional market.

This market can be defined as a cyclic bubble market, where every Bitcoin cycle goes on the bubble, sometimes a big bubble or sometimes minor bubbles.

So we would go so far as to specify that Bitcoin has gone on the bill more than 9 times in recent years, if not even 10 considering the last movement, and not once as those of traditional finance say considering these data.

We are making a mistake

The problem is that even today few people have understood the true functioning of Bitcoin, they always tend to refer to this market with the classic markets that is comparing it to gold or to the dollar and so on, but in reality they are making a bit of confusion.

The thing that is bringing Bitcoin into the world is not an improvement of traditional finance, that is, creating a new asset to speculate on the stock exchange, but what it is bringing is a technological innovation that is compared to the Internet or to television or smartphone, etc.

So we have to compare Bitcoin with these technologies, ie will Bitcoin improve our lives than before?

This is the question to ask and not if the Bitcoin is on the bubble or worth x Dollars, because we are completely wrong to interpret this technology.

If we consider the Internet, it has brought a technological innovation to all of us, and as a side effect it has brought with it a value that has been given by the companies that use it to provide services, even if it has a price does not mean that it is a well but simply a value that is given for marketing.

This we have seen together from the data of before in when this market is completely different from the classic market and this must make us think.

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