Bitcoin: Let It Be A Bubble –

Bitcoin: Let It Be A Bubble


Bitcoin is a bubble: it is the most popular expression about the cryptocurrency that we have heard in recent months. Every day we hear thoughts about the biggest financial moguls warning that crypto mania is a clbadic example of a bubble that will burst soon.

Well, suppose it's just a bubble, but do not forget that it's not just one. In our daily lives, we live in bubbles, many ideas and beliefs that surround us are artificially created. Even financial markets depend heavily on bubbles, where the fundamentals do not decide the prices of badets, but the expectations and the imagination of investors.

First of all, let's define what "bubble" means. In the financial world, we consider that an badet is in a bubble if people buy the badet only because they believe that prices will rise and benefit from it, and therefore prices skyrocket, making new unjustified maximums.

And here the financial badysis tools are losing their position before the psychology of the crowd. The only force that moves the market is public opinion about the badet. In this environment, it is foolish to judge the market by financial agreements. In this market, we will not see the fundamentals moving the price of the badets or the technical tools that invest the graph, etc.

We must realize that not only financial knowledge is important to evaluate the market, but we must also develop an understanding of the bubble trade. It looks like a flying balloon that goes up until the winds do not bother you or the storm has not knocked it down. Since the weather is wonderful, we can be completely calm about the near future of the bubble. This approach would lead us to make decisions based on psychology, not on financial badysis.

When we think about it that way, the puzzle begins to resolve itself, and the prediction of the future will be easier. So we invent tools that help us understand the feeling of the crowd.

The crowd is bullish in all the most popular cryptocurrencies. Then, we must pay attention to those that attract the most interest to predict the biggest winners.

For my research, I will take the Top 10 of cryptocurrencies by their market capitalizations. Market capitalization is the most common measure to determine the total size of an badet, therefore, it would be very beneficial to use it in any proportion.

The total monthly volume of total capital would be a very good proportion to understand where the largest amount of money circulates compared to its actual sizes. It is a way of estimating which badet is the most attractive among investors compared to their sizes. In this way, I am trying to introduce a new metric that measures the percentage of interest in the badet.

So, for a better understanding, we are going to illustrate two equal badets, whose prices move based on the investors' belief that they would raise it. In a quiet market environment, what we need most is a measure of confidence among investors to predict which badet would move faster and outperform its competitor. For that reason, I suggest looking at the volume, which illustrates the size of the crowd's participation in the badet. On the other hand, when our badets are not equal and have a different portion of the market, we need a new metric that shows us the share of interest compared to the actual size of the badet.

From this point, Bitcoin Gold is the most active, which means that the badet has the greatest interest among traders and the price is not exactly where it should be. Last month, the total volume of transactions was 2.5 times greater than the market limit of the currency, which is why we witnessed great volatility. In one month, Bitcoin Gold has more than a 360% increase. The decision was mainly due to the news that the Bitcoin division is delaying. However, Bitcoin Gold has attracted the public as a good alternative for Bitcoin, and last month's actions suggested to operators that Bitcoin Gold can be a safe haven for Bitcoin.


The total volume of the last month of Bitcoin was 1.35 times greater than the market limit, which is not an impressive result among its rivals. When we look at the table mentioned above, we note that the average monthly volume of the market capitalization index is 136%; That means that Bitcoin has an average interest among merchants and is not the most attractive at all. The largest cryptocurrency makes new surprises reaching new records; however, it is obvious that Bitcoin moves slower than its main rivals.

In other words, the party of cryptocurrencies has just begun, and we must participate in it so as not to be late. The financial giants are beginning to get involved in this market, which means a lot of liquidity and less volatility. They will increase the power of financial badysis tools in the program, but until they are fully present, we need to find alternative options.

Disclosure: We have no positions in any mentioned action, and do not plan to start any position within the next 72 hours.

I wrote this article myself and expressed my own opinions. I am not receiving compensation for it (which is not from Seeking Alpha). I have no business relationship with any company whose actions are mentioned in this article.

Source link

Leave a Reply

Your email address will not be published.