Paul Mampilly Blog | Bitcoin’s Collapsing … but There’s a Much Safer Digital Currency | Talkmarkets - Page 2
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Paul Mampilly is an American investor and former hedge fund manager. Paul has been featured on CNBC, Fox Business News and Bloomberg TV. He is the founder of the popular investment newsletter Profits Unlimited, where he uses his skills, experience and knowledge as a former Wall ... more

Bitcoin’s Collapsing … but There’s a Much Safer Digital Currency

Date: Thursday, September 28, 2017 3:11 PM EDT

So far in 2017, an estimated $1.25 billion was raised in ICOs. In July alone, 34 ICOs launched for a total of $665 million.

And total market capitalization of virtual currencies or cryptocurrencies has gone from less than $20 billion at the start of 2017 to about $120 billion.

That’s incredible for a market that’s barely a decade old … and where no one knows what the long-term supply or demand is.

That’s the critical thing for me. Because in the end, all investments, including bitcoin and any other cryptocurrency, are still set by what someone is willing to pay for them.

That’s what supply and demand represent: the price at which one person is willing to buy and another person is willing to sell.

Not a Straight-Line Decline

When an investment becomes too popular, people buy too much, and they pay too much for it.

When it becomes clear that the buyers are all-in, and no more high prices are coming … that’s when a collapse happens.

We saw that happen in 1999 to dot-com stocks, and to real estate in 2008.

Thus far, bitcoin’s collapse has been unspectacular, with a total decline of about 18%.

However, the evidence is building that bitcoin and its fellow cryptocurrencies are going to experience a bubble-style collapse.

If that’s right, then you should expect bitcoin to go down by as much as 80% from its peak.

That would put it at a level of around $1,000. However, bubble collapses can overshoot or undershoot this target by 5% to 10%.

A bubble-style collapse is usually interrupted by incredible rallies. So, people expecting a straight-line decline are going to be disappointed.

The other thing about bubble-style collapses is that they last a while. My best guess is that when the cryptocurrency collapse, if it happens, it will last at least five years.

By then, bitcoin, and whatever few cryptocurrencies survive, will be deeply unpopular … and that’ll set the stage for a new bull market for these investments.

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