The rise and growth of financial bubbles are never new.  There have been losers and survivors.  Financial bubbles expand, and they do contract. There are causes for the final burst of speculative bubbles.

When the price of an asset rises high beyond the justification of economic fundamentals, a bubble is formed.  As the price increases and increases, until fundamentals cannot anymore justify the price, it ultimately leads to a situation where it bursts and the sustainability of the price collapses. Therefore, realistic value is crucial to have people buy into the idea of selling and buying the asset type.

Irrational enthusiasm leads to more of investors entering the market.  When more investors are buying into an asset type, the value of the asset increases due to increased demand versus the scarcity factor.  Beliefs in peer enthusiasm and faith in the idea that the price will never go down, investors are tricked into an illusion that they have entered a “new era” – they tend to strongly believe that the old fundamentals of financial evaluation will not work anymore with this asset type.

Many of them who fail to invest in the asset type pathetically are left wondering how they missed the opportunity of investing in the asset type.  At this point, market influencers step in and exhibit their business intelligence. And, to prove their conviction, they invest their money, and eventually, a “herd behavior” is created.  A lot of narratives do the rounds triggering optimism. Finally, people buy the rising bubble. The bubble keeps booming, and ultimately it busts. So, what has this to do with Bitcoin?

Bitcoin (BTC) seems to have a rising exponential value, and the price comes crashing down many times.  Despite this, investors continue to buy into the idea of BTC.  The fundamentals of Bitcoin valuation are not yet clear. Despite this, the buying continues.  The stacking continues.

Pbs.org points to:  “Five examples of historical speculative bubbles: the Dutch Tulipmania (1634-1638); the Mississippi Bubble (1719-1720); the South Sea Bubble (1720); the Bull Market of the Roaring Twenties (1924-1929); and Japan’s “Bubble Economy” of the 1980S.”

Financial bubbles catch the attention of government commissions at one point in time or the other, and litigation ensues.

The price of Bitcoin has been contracting and relaxing, and it just looks like there is a mix of hype and hysteria doing the rounds encouraging folks to stack and hold.

The backing of fortune 500 companies impresses retailers who are wondering if they should buy or not.  The widespread understanding is that if significant companies venture into an asset type – it likely is good.

For now, it looks like the Collapse of Bitcoin (BTC) is always coming and never arriving, but we cannot be sure that institutional financial strategies are not hysterical! After all, every company is backed by a visionary who is human!