Following talks of Bitcoin being in a bubble as its price rises to as high as $1,900 on some exchanges this week a Blockchain consultant has given his projection of what to expect in the coming days.
Bitcoin is about to enter into the bubble point
Bellaj Badr, CTO at a specialized startup in the Blockchain technology Mchain, notes via a mail that the Bitcoin ecosystem is about to enter into the bubble point. However, the ongoing price rise could have continued into the $3,000 to $4,000 region if not for the pending scalability issue.
“I think we are at the early stages of a bubble. We might be at the start of a new boom phase,” he writes. “This year, Bitcoin’s price has gained a huge momentum as more and more traders entered the market and demand increased considerably in some countries especially in Japan (which recently recognized Bitcoin as a legal form of payment), South Korea and India. However, this demand doesn’t explain the price doubling in five months from about $900 to $1,800. Instead, this surge was due to the big speculation movement pushed by three factors.”
He cites the rise in the number of institutional investors coming into the Bitcoin cryptocurrency market as a major factor. He also adds that there is a change of perspective in the way “the real world” responds to Bitcoin’s growing popularity unlike how it was seen before. He says they don’t seem to fight it anymore and the previous fears have been dismissed.
Recognition of the digital currency
A third factor is the good news of the Philippines, Japanese and Australian governments’ recognition of the digital currency to buttress Bitcoin’s growing expansion. This, he says, made the market gain more confidence and as the price continues to grow quickly, attracted more people into the speculation world of Bitcoin as well as for other cryptocurrencies to drive the price sharply as it happened in 2013.
“This bubble won’t burst soon. I think if the scalability issue is resolved by SegWit activation, the price will continue climbing to reach a new all-time high level. This growth will continue until it reaches the peak – around $3,000 and $4,000 – then I expect a smooth collapse over a year or more but not a brusque burst to return to a $1,000 situation.”
Badr had earlier written that several comparisons have been made between the emergence of the Blockchain technology with the Internet in the 80’s to provide biased and optimistic forecasts without a mention of the shared risks. He hinted that a crisis is coming in the crypto market like dot com bubble burst of 2001.