Are cryptocurrencies by their very nature something that is bound to burst? That is what many who follow them closely like to believe. Then there are those on the other side who see this all as a much more debatable topic of discussion. Those who see the debate are often the same people who believe in the power of cryptocurrencies in general. As you can see, it is a divisive thing to talk about in general. People have their hearts in one camp or the other in a lot of cases.
Why Cryptocurrencies Are Not A Bubble
There are valid reasons why a person might believe that cryptocurrencies are not a bubble at all. For one thing, there is the origin story of cryptocurrencies, to begin with. They were not really on anyone’s radar in the past, but all of the sudden they were everywhere. It is true that a limited number of retailers accepted them as currency long before the financial world understood exactly what they were, but these days it seems like everyone is talking about cryptocurrencies.
You have another argument that suggests that cryptocurrencies are just at the beginning of their popularity as their influence continues to spread, particularly with online commerce. Why would this be the peak when there are so many more avenues that cryptocurrencies might explore?
Why Cryptocurrencies Are In A Bubble
Come on now, just take a look at some of the price charts in recent times. When does it ever make sense that something goes from two-thousand dollars per coin all the way up to seventeen thousand dollars per coin in under a year? It is hard to see that kind of price action replicated in a lot of other types of investments. That is why some are advocated for staying away from this currency.
Another reason to worry about its price being pegged this high is that it is not tied to any particular thing of value or substance. Cryptocurrency is supposed to have value in and of itself. There is nothing that it can be directly traded in for. You are simply putting your full faith in the prices set by other traders all around the world. If the faith suddenly goes away there will be no real value in cryptocurrencies.
Should You Invest In It?
This is the million dollar question. Perhaps there is a great value to be had in cryptocurrencies and perhaps not. It is hard to say without being able to see into the future. Most prudent risk managers would say that it is obvious that no one should sink their whole life savings into this kind of venture. At the same time, there may not be too much risk in putting at least some money away in this currency if you really believe in the virtues that it does have. It is definitely a tough call for a lot of people who want to be true believers in it but maybe are not quite sure just yet.
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