A fresh growth spurt for Bitcoin has seen traditional investors once again surface to comment that the digital currency bubble is on the verge of bursting. But those involved are bullish and optimistic that the real growth has not even begun yet.
It is not only the growth of Bitcoin, which has been unprecedented this year alone but the birth of altcoins and the ease in which money is seemingly created from nothing through ICOs. Bitcoin’s fork, and the creating of Bitcoin Cash is another ‘bubble-warning,’ apparently.
A year of growth
Bitcoin, and cryptocurrencies in general, have staggered many with the way in which they have grown in 2017 alone. A new high of $3,500 was achieved earlier this month when Bitcoin succeeded beyond its Aug. 1 ‘Independance day.’
This growth has also seen a host of other altcoins and their value dragged up with the original cryptocurrency.
These altcoins have come from the creation of highly popular ICOs, which have seen record falls almost weekly as one outdoes another.
At the start of 2017, the total value – or market cap – of all cryptocurrencies in existence was about $17.5 bln, with Bitcoin making up almost 90 percent of that, according to CoinMarketCap. It is now around $120 bln.
This is about the same value as Goldman Sachs and Royal Bank of Scotland combined.
Fear from the traditionalists
While companies like Goldman Sachs have appreciated the value of Blockchain technology and cryptocurrencies, it is traditional investment companies like these that are ringing the bubble panic bells.
“It’s just created new value out of nowhere,” said Rob Moffat, a partner at Balderton Capital, a London-based venture capital firm who focuses on fintech, about Bitcoin Cash’s hard fork. “There’s no fundamentals behind any of this – it’s all based on public perception, so you can start to see some really strange phenomena.”
Earlier, in July, Billionaire US investor Howard Marks described the Bitcoin boom as similar to the dotcom bubble, which he predicted.
Other investment firms, like Citadel, have likened it to the Blackberry Bubble.
However, there is a whole other camp of believers who are calling this new high for Bitcoin as only the beginning of a Bull run.
“The idea of this thing being a bubble is silly. We’re in the bottom of the first innings,” said Miguel Vias of Ripple, the third-biggest cryptocurrency, who was previously global head of precious metals and metal options at CME Group.
The fear of all cryptocurrencies rising together, along with Bitcoin, is to be expected as their values are highly correlated, feeding off each other and magnifying the market effect, and this should not be seen as a sign of a bubble.