Is the bubble bursting?
After 'blasting off to the moon' in the last half of 2017, the price of crypto currencies seems to have come crashing back to earth. Some even say that the massive price increases in 2018 was a bubble waiting to burst. The Sleuth's thoughts below.
After jumping to an all time high at the end of 2017 the vast majority of crypto currencies have spent 2018 coming back down to reality. There have been many explainations - from musing about the activities of whales cashing out, to the narrative that cryptocurrencies are finally receiving a dose of reality. An interesting and popular narrative states that the crypto bubble is about to burst; much like the 2001 dotcom bubble burst.
A historical look at cryptocurrency price trends is a good place to begin when wanting to determine the validity of this narrative. In order to do this the Coin sleuth took a look at the Bitcoin Core (BTC) price chart as a starting place. It becomes quickly evident that at several points in the past, the Bitcoin price ascended quickly only to drop just as quickly if not quicker; peaks in price can be seen on
- 10 June 2011
- 10 April 2013
- 30 November 2013
In each of these instances, the peak was followed by a steep drop and, excluding the April 2013 event, a sustained period of stagnation, in the price levels. The Coin Sleuth would like to posit that in as far as Bitcoin is concerned, the price is undergoing a similar period of consolidating at a new price level of approximately USD6000, with the potential to rise to a new price level.
A comparison of the Bitcoin, Ethereum and Litecoin all time price movement charts at Coinbase shows that the story seems to hold true from Litecoin as well - notwithstanding the seeming greater volatility of litecoin during the peaks and the troughs. Interestingly, in the case of Litecoin, this is in spite of recent huge drops in price; drops which seem to represents a search for a new price level.