Just like the 90s when the dot com bubble grew out we are having the same kind of situation with the crypto currencies. The bubble of crypto currencies of which Bitcoin is the flag bearer has grown out of speculative and fad based investing. There will always be bubbles as they are driven by greed, what makes these bubbles grow is the people jumping in blindly to make fortune While most of the people are over confident when it comes to Bitcoin and other crypto currencies what most of them are unaware of is the recent plunge in Bitcoin and other big market cap currencies might not be the opportunity to invest in the hopes of getting a rebound.
The booming entrance and sad exit?
Since the boom of Bitcoin and other crypto currencies the doubts regarding their regulation has been hanging like a sword over the necks of innocuous investors. Sure, you might have made a fortune from Bitcoin but let’s not forget that so it seemed during the dot com bubble, Bitcoin has performed exceptionally well over the year but it is not a source of perennial wealth. While with stocks we have valuations and other tools to fall back on but with crypto currencies, there isn’t much history to rely upon and much less logic too. The world is still new to crypto currencies and the market is being driven by greed rather than knowledge. Many traditional fundamentals are being ignored by the unaware and innocent investors as they are investing on the opinion of someone else and this, in turn, is providing the fuel for the bubble to grow.
Are Bitcoins legal in your country?
There has been speculation regarding the legality of Bitcoins in many countries and the root cause for this lies in the large decentralization of Bitcoin and uncertainty regarding its regulation. China recently made a statement that crypto currencies have seriously disrupted the economic and financial order and also a put a ban of ICOs that is the Initial coin offerings which are the means to raise funds for a new currency. China’s ban has hit the market badly and thanks to the warning against the legality of some ICOs by U.S Securities and Exchange Commission the investors have grown cautious and a sharp drop has been registered in the past few days. What we are witnessing is an escalating number of warnings which will be followed by some big changes. Although Bitcoin is here to stay it will be taxed into shape and regulated because an enormous amount of around $75 billion is out there.
What if the government bans the entire process?
There are some seriously flawed assumptions when it comes to Bitcoin and crypto currencies and the major one of them is that government won’t do anything with multi billion financial network that can be used by anyone be it a teacher or a hardcore militant, some of the people also believe that governments can’t do much in this regard what they don’t understand are even if government can’t keep track of individual transactions if they impose ban on these transactions the impact on crypto currencies market will be such that they will become useless for investors.
These recent warnings from the two biggest economies in the world cannot be taken lightly as they affect the markets directly be it commodities, equities or crypto currencies. In the wake of the enormous growth of crypto currencies like Bitcoin, it has been realized that these currencies are not just a tool for an individual for making money they may be used by terrorists to fund illegal activities and used for money laundering activities. When there is a period of recession the governments add more cash to the market so as to increase the inflation and through various methods it controls the economic and financial condition of the currency holders but it is not so with Bitcoin as it is being driven by people who have turned a blind eye towards the fundamentals. Various agencies associated with the government of different countries have been analyzing and looking for ways of regulation and sooner or later it will be done. The market may flourish for now but let’s not look through the myopic lens as in the long run, the story will be different.