The Crypto Bubble Has not Burst Just Yet

By Prashant Jha

The cryptocurrency space was often compared to a technological bubble in its early days, and while many claims that we have surpassed the bubble phase, there have been many recent references of Bitcoin going through another bubble phase before breaking into a full-fledged bull run.

The bubble debate is back into the center of attention after the recent surge in prices of Bitcoin. So what is this bubble we keep referring to and when is it going to burst?

Well, the answer lies in price volatility, any technology or asset when it is new show wild price movements, both in terms of incline as well as decline. Once the asset forms a stable ground, where its prices do not heavily dependent on the media hype, it is believed that the asset has come out of its bubble phase.

Bitcoin has certainly shown signs of maturity over the years, but its prices are still quite volatile swinging $1000 of dollars towards both the sides. The prices of Bitcoin continued to slide throughout 2018 and led to a total loss of more than 80 percent of the total market cap from its highs of 2017.

In 2019 the prices were quite bullish and from the start of the year, the prices have seen an upward movement. But most of the gains were immediately neutralized due to a market pullback. However, things started to change since the beginning of April, where its prices started to climb wildly making double-digit gains in a matter of few hours, showing strong signs of volatility.

The market has been quite bullish ever since, which saw them adding almost double to their market cap since the start of the year. So, despite the bullish sentiments in the market, the price volatility is still a big factor, as evidence from the market correction. Be it the climb in prices or the decline, both have been quite wild.

So, in order for Bitcoin to get out of the Bubble phase, it needs to find a stable ground where the prices do not go through a heavy swing be it the climb or the decline.