Will Bitcoin Rise Again? Just over a month ago the whole world was freaking out about Bitcoin, its price simply skyrocketed, going to over to $20000 and tons of people invested in it heavily, expecting it to increase further to $100000 maybe or even to a million dollar. But unfortunately, tons of people lost money because over the last month, bitcoin’s price went down significantly to under 10K and it seems to continue decreasing.
It’s not surprising that bitcoin is crushing because that’s how our economy works, so let’s take a deep look at how and why exactly it happened and will its going to increase again!
How Markets Works?
Our economy works in a very predictive way, it grows slowly and then suddenly skyrockets, and then crushes, and after a period of time, it starts recovering back, and that process repeats over and over.
The same cycle happens to companies, real estate and the most recently, it happened to bitcoin and other cryptocurrencies.
But why does that happens!
In the free market, prices are set by the supply and demand, if more people want to buy something, the price naturally increases and vice versa of course, if the demand for iPhones decreases, the price naturally falls down! that’s why gold is expensive because the supply is limited while there are tons of people who want to buy it. And as long as there will be a demand for gold, prices will stay high!
In 1997, there was a .com bubble, the internet started exploding because everybody believed that this is the next big thing. Since everyone wanted to make money, people simply started throwing money at every new tech company, that’s why new companies emerged every day. In fact, over 1300 companies were created during that period and among them were Google, Amazon and many others.
The stock market was going through the roof because everyone was investing, so the media was obsessed about it and never stopped talking about the financial boom that was going on in the stock market, which drove even more people to invest and that led the prices to increase to unbelievable numbers. amazon’s stock price, for example, increased from less than 2 dollars to over 107 dollars in just 3 years.
But as soon as people realized that most of these companies are overvalued, they wanted to get back their money before the market crashes otherwise they will lose all of their investments.
And as always media started raising the panic again, that if that this is the end of the world, and that led everyone else to pull out their investments. And the result was that Most of these companies went bankrupt and people lost billions of dollars. Amazon’s stock price, for example, fell to only 7 dollars and the company was on the brink of bankruptcy. Only a few companies could survive the crash and today they are leading the tech industry.
Will Bitcoin Going to Increase Again?
The same thing happened in 2008 by the way and now it’s it is happening to cryptocurrencies, when bitcoin just emerged in 2008, it got a lot of attention from specialists who really understood its potential to replace our current monetary system since it has crushed the entire economy. And over the years, besides attracting more and more people, many other cryptocurrencies emerged, exactly like in 1997 everyone started a tech company.
And in January 2017 when the bitcoin become over $10000. The media became obsessed with it and started talking about it continuously, attracting a massive amount of people who have absolutely no idea what its bitcoin or how does it works, but everyone wanted to make money, so people simply started throwing money into bitcoin and other cryptocurrencies.
Many cryptocurrencies emerged every single day and by the end of 2017, there were almost 2 thousand cryptocurrencies in the market.
In fact, there is a website where you can go and create your own cryptocurrency.
Anyways, after these massive investments, as soon as people realised that its a bubble, that bitcoin simply doesn’t worth that price, at least for now, a lot of people pulled out their investments which forced the prices to drop, and of course when the media started reporting that bitcoin’s price is falling, everyone else (especially the ones who don’t understand how it works) also started selling their investment, which caused the price to fall even further.
Exactly like what happened in the .com bubble in 1997. It goes back to the same basic principle of supply and demand! So the main question is, will it grow again! I am not sure exactly about bitcoin, but cryptocurrencies, in general, will start becoming more and more popular and probably will not experience such a dramatic growth like last year, and the one that will prove to be more reliable will most likely dominate the market in the coming future!