The mainstream media is desperately trying to peg Bitcoin prices as an unsustainable bubble. They claim that valuations have skyrocketed, that enthusiasm is excessive. Some truly have no idea why they believe in the mythical Bitcoin bubble — they just do.
But the problem with this reasoning is that it has been terribly wrong throughout every psychological threshold. When Bitcoin prices first exceeded four-digit territory, financial analysts sounded the bubble battlecry. They were right, but only for a few years. Eventually, as we all witnessed, Bitcoin prices jumped beyond the $7,000 mark.
At time of writing, the king of cryptocurrencies is trading hands at $7,040. Although it may seem like an ideal time to sell, I refuse to do so. As I’ve expressed across multiple publications, Bitcoin prices will eventually hit $10,000.
From there, I honestly believe the sky is the limit. Here are three reasons why stories about the Bitcoin bubble and the impending collapse in cryptocurrencies are overrated.
Trading Psychology
We often forget that the markets are only reflections of human psychology. Fear and greed from the mass consciousness come together to negotiate a perceived fair value. And once a psychological target like $10,000 is in sight, the bulls have an extra incentive to push for it.
Don’t try to overthink this. We humans love big, round numbers. When we perform quick calculations, we prefer adding ones, tens, hundreds, and so on. It’s quick, easy, and neat. The same concept applies to trading. We see a target, we try to go for it — it’s that simple.
Mass Integration Ahead
Many critics assume that we’re in a Bitcoin bubble because of excessive enthusiasm. But it raises the question, how can such excess be possible without mass integration of the blockchain and cryptocurrencies? The vast majority of businesses do not accept cryptocurrencies as payment.
That’s about to change, according to Zero Hedge, which reported on rumors that Amazon will accept Bitcoin and othr cryptocurrencies as payment. I don’t consider Zero Hedge to be a reliable source (anonymous editors named after a fictional character?) but there’s substance to the rumors.
Checkout the WHOIS stats for the following domains: amazonethereum.com, amazoncryptocurrency.com, amazoncryptocurrencies.com. All of them are registered to Amazon.
Fundamentals Remain the Same
It’s alarming the number of professional, mainstream analysts that justify the Bitcoin bubble argument simply on the basis of rising prices. A bubble needs more than just a stronger-than-expected bull market to be labeled as such.
The most significant element of an unsustainable bubble is the integrity of the fundamentals. Most markets collapse when the fundamentals no longer check out; for instance, tech stocks that had falsified or grossly exaggerated financials.
But nothing has changed with cryptocurrency story. Bitcoin prices have always gone up based on speculation of its underlying blockchain technology. If anything, we’re seeing a growing acceptance of that technology, not a rejection of it.