The comparisons of Bitcoin to the speculative bubble catastrophes of the past — from Tulip Mania to the South Sea Bubble — are tired at this point.
And Troy University Prof. of Economics Malavika Nair suggests the tediousness of these comparisons aren’t because they’ve become cliché by now, but rather that Bitcoin isn’t fundamentally like these past bubbles.
“Whatever it is, it’s definitely not a bubble,” Nair said in recent comments to the press.
Call it a new globalized, decentralized kind of investment excitement, or incredibly disruptive tech that could upend and refashion the pillars of society as we know them — either way, Nair highlighted how classical financial bubbles haven’t behaved in the same way Bitcoin’s behaving now.
Specifically, Nair — a banking theorist — noted that Bitcoin consistently shoots up, only to retrace a little bit before shooting up to newer heights.
This kind of movement is atypical of the “firecracker” dynamic you find in traditional bubbles, wherein the bubble bursts, as it were, at the at the peak of its first — and only — height.
Consider the aforementioned Tulip Mania, for instance. Dutch traders who mortgaged their entire lives on the seventeenth-century Dutch tulip craze didn’t see that market enter a series of bull traps before steadily declining.
Instead, it burst quickly, in one swoop.
The fact that the bitcoin price just eclipsed the $8,000 USD milestone for the first time after the botched SegWit2x hardfork alone should be enough to prove that the Bitcoin community is as resilient as it’s been dramatic as of late.
"It's not crazy to think that bitcoins could maintain their value over the long run. Bitcoin may not be useful for very much beyond being a way to store value, but the same is true of gold—and gold has stayed valuable for thousands of years now." https://t.co/PfvKzqEguc
— Ars Technica (@arstechnica) November 18, 2017
Perhaps the new escrow-crypto Confido (CFD) was a bubble, as CFD’s price crashed over 85 percent on the same day BTC hit its current all-time price high. That’s up for debate at the moment.
But what seems increasingly undebatable, like Malavika Nair suggests, is that the Bitcoin boom is unfurling unlike anything humanity’s seen before.
And with acclaimed Technical Analyst Ramiro Burgos’ Fibonacci rules having BTC aimed at $12,000 in January 2018, maybe the growth really is only just beginning.
TLDR: Bitcoin doesn’t appear to behave like a traditional “bubble.” BTC’s price discovery patterns suggest it’s a different beast entirely.