My thoughts about the current cycle and the bubble speculation
During the very early years of Bitcoin, and cryptocurrency in general, there began the mania. I'm talking about before 2015. This mania was centered around the Dark Net markets and cryptocurrency was mainly used as a means to achieve extreme transaction privacy. You could make a transaction to anyone in the world without a bank, or any regulatory stature and you wouldn't have to even be physically there. Of course this is perfect for criminals, it's exactly the solution to the biggest issue they've ever faced; transacting without third party intervention.
So they used it, and it was climbing in price astronomically. Then the government started fighting back against the Dark Net websites. They shut down Silk Road, Mt. Gox was hacked (not by the government, but this definitely contributed to the downfall of Bitcoin in 2014), the Chinese government banned financial institutions from using Bitcoin, Chinese exchanges bank accounts were closed, BitLicense was proposed, and Bitstamp was hacked (again, not by a government). Every single one of these events stifled Bitcoin's mania. The Bitcoin name was tarnished with these events. Associated with major crime and the legendary Dark Net, Black Hat hackers, scams, and of course the old saying "Well how can something intangible be worth anything?"
I propose to you all, in the ellipse is the famed Bitcoin Bubble. The "Black Swan." This is not to say there will not be another bubble, but that the first bubble has already popped. I compare this bubble to the popular Dotcom bubble of the late 90's because after 2014, Bitcoin lost almost 90% of its value, same with most Dotcom companies. However, those prices did not drop to 0 simply because they had a useful impact for society. Dotcoms became some of the largest companies known today. Amazon especially; their stock is valued at $1,000.
I've outlined what I believe to be Bitcoin's cycle so far. We still have wave 4 to finish and wave 5 is coming. This is pure speculation, but I think that once Bitcoin's fifth wave finishes and the correction starts, it will be a very large correction indeed. This is because right now I see things like adoption, big money and a much wider array of exposure happening. When I walk down the street and ask someone, "Hey, could I get your opinion on cryptocurrency?" I get a quizzical response, but once I say "Bitcoin" they respond with, "Oh yeah, I've heard about that!" What I believe to be happening is that the "herd," like the ACTUAL herd of the world is still oblivious to cryptocurrencies, but the word is spreading.
Anyways, to get back on track, the square in the chart is the part where big money is really starting to come into play. People are starting to see not just the worth of this "crypto-craze," but the worth of the blockchain technology itself. Just like the aftermath of the Dotcom bubble, now there are massive companies out there that are solely internet-based and worth much more than Bitcoin. However, the issue that I am currently seeing is that fear spreads like wildfire and the internet has created hyper-communication to the point that when people read online that China is banning ICO's and shutting down exchanges (even though they only account for less than 15% of the whole market and they are probably just trying to find decent regulations) they tend to panic-sell. Panic-sell to the point of driving the price down by about 41% in just the first corrective wave (Wave A, not in the chart mind you).
This is with big money and the early adopters right now. Imagine what happens when you get almost everyone on board. People who are not familiar with Bitcoin's volatility, or "buy the dip," people who do not know much about markets but just wanted to buy into the hype at $4,500 then see their investment drop by over 20% in a day or two. Of course, this is all speculation, just watch out for the fallout of Wave 5.
So they used it, and it was climbing in price astronomically. Then the government started fighting back against the Dark Net websites. They shut down Silk Road, Mt. Gox was hacked (not by the government, but this definitely contributed to the downfall of Bitcoin in 2014), the Chinese government banned financial institutions from using Bitcoin, Chinese exchanges bank accounts were closed, BitLicense was proposed, and Bitstamp was hacked (again, not by a government). Every single one of these events stifled Bitcoin's mania. The Bitcoin name was tarnished with these events. Associated with major crime and the legendary Dark Net, Black Hat hackers, scams, and of course the old saying "Well how can something intangible be worth anything?"
I propose to you all, in the ellipse is the famed Bitcoin Bubble. The "Black Swan." This is not to say there will not be another bubble, but that the first bubble has already popped. I compare this bubble to the popular Dotcom bubble of the late 90's because after 2014, Bitcoin lost almost 90% of its value, same with most Dotcom companies. However, those prices did not drop to 0 simply because they had a useful impact for society. Dotcoms became some of the largest companies known today. Amazon especially; their stock is valued at $1,000.
I've outlined what I believe to be Bitcoin's cycle so far. We still have wave 4 to finish and wave 5 is coming. This is pure speculation, but I think that once Bitcoin's fifth wave finishes and the correction starts, it will be a very large correction indeed. This is because right now I see things like adoption, big money and a much wider array of exposure happening. When I walk down the street and ask someone, "Hey, could I get your opinion on cryptocurrency?" I get a quizzical response, but once I say "Bitcoin" they respond with, "Oh yeah, I've heard about that!" What I believe to be happening is that the "herd," like the ACTUAL herd of the world is still oblivious to cryptocurrencies, but the word is spreading.
Anyways, to get back on track, the square in the chart is the part where big money is really starting to come into play. People are starting to see not just the worth of this "crypto-craze," but the worth of the blockchain technology itself. Just like the aftermath of the Dotcom bubble, now there are massive companies out there that are solely internet-based and worth much more than Bitcoin. However, the issue that I am currently seeing is that fear spreads like wildfire and the internet has created hyper-communication to the point that when people read online that China is banning ICO's and shutting down exchanges (even though they only account for less than 15% of the whole market and they are probably just trying to find decent regulations) they tend to panic-sell. Panic-sell to the point of driving the price down by about 41% in just the first corrective wave (Wave A, not in the chart mind you).
This is with big money and the early adopters right now. Imagine what happens when you get almost everyone on board. People who are not familiar with Bitcoin's volatility, or "buy the dip," people who do not know much about markets but just wanted to buy into the hype at $4,500 then see their investment drop by over 20% in a day or two. Of course, this is all speculation, just watch out for the fallout of Wave 5.