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Bitcoin To The Same Fate As The Tech Bubble?


Apr 10, 2018 Posted /  1031 Views


Bitcoin To The Same Fate As The Tech Bubble?

Tech bubble had not one or ten, but hundreds and thousands of companies under it during 1998 to 2000. Any company or business model which was based on the internet had millions of investors throwing wads of cash on them, endlessly, and all these companies had to show was how much they are worth to justify that money they demanded and nothing else! Really. It was that simple.

Well, what is tech bubble? It’s nothing but an unsustainable market rise which is attributed to the increased speculations in the market stocks over the time, which builds up in the market.

Revenue for these companies was always secondary, and profit was easy as it could be generated over the time somewhere down the road quite effortlessly. Public companies had an easy way out. All they had to do was become public, split themselves into million shares, recover the investment money, make some profit and boom, they are the full cycle.

And this precisely is the strategy with bitcoin.

A strategist with Morgan Stanley, Sheena Shah throws light on these similarities between Bitcoin and Nasdaq during the tech bubble. Both of them were evaluated big, started off big and huge in its value and eventually dropped.

Shah in her report focuses on the peak and bottoms of Nasdaq and compares this analysis with that of Bitcoin. While the differences are stark as the data set is dissimilar on many levels. Still, the observation was difficult to digest.

According to the report, following were the observations made:

The four trough to peaks for the Nasdaq averaged 40%

The three trough to peaks for Bitcoin has averaged 43%

The five peak to troughs for the Nasdaq averaged a decline of 44%

The three peak to troughs for Bitcoin has averaged a decline of 47%

Shah has a similar analysis to that of Stefan Hofrichter who is Allianz’s Head of Global Economics & Strategy. In his analysis, he developed 8 criteria to assess and determine the asset/stock is in price bubble or if it will sustain the blow (to which bitcoin is showing so much similarity).

Tom Lee, Ex-Morgan Stanley strategist and currently heading the R&D at Fundstrat. He said that bitcoin is oversold and has high potential to reach as high as $91,000 by the end of the year 2020 if it keeps performing good and strong.

The rise of Bitcoin from $10 to $600 to $2000 and then to $7000 is the biggest fluctuation and the existence of a tech bubble in the 21st century. The currency surged by 2000% in 2017 and came crashing down in 2018 to its half. This is because of many reasons, one of which is the issues which came about with its regulations and resistance shown by many government and countries.

Well, we can only say that it doesn’t see that bad a landing which tech bubble had to see and that bitcoin survives well, and flourishes a lot without any pain but brings a lot of gains!


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Tags: peaks for Bitcoin

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