Reasons to Be Bullish Over a Bitcoin Bubble; The Theory That Bitcoin is like the Dot-Com Bubble in Hyperspeed
Steven Russolillo said Bitcoin looks like the dot-com bubble at 15x speed. One could argue that Bitcoin is a bubble and bust economy in hyperspeed, and thus the comparison is notable.
NOTE: This page discusses theory (or more specifically speculative hypothesis), for entertainment purposes. The idea that Bitcoin is a bubble or is a bubble that can be compared to the dot-com is not gospel truth.
The idea that the Bitcoin bubble is like the dot-com bubble in 15x speed might sound bad, and if it is true, it could have some negative connotations in the short-term. However, from a long-term perspective, if you let the logic of that play out, you can see that this is an exciting proposition.
The reality is, we should all hope the theory holds weight and Russolillo is right because this is how we get to estimates of where Bitcoin is headed to levels like “$50k” or “$100k.”
If Bitcoin repeats its history since 2014 or the NASDAQ’s history since 2002 (about where we would be at on the chart now in Bitcoin years), then that means in the coming months or years we should be blowing past $20k.
Why should it be so surprising to see this? Bitcoin has bubbled and busted more than once before only to come back with bigger, badder fractals (in that Bitcoin’s bubbles and busts have not only looked similar to classical bubbles but to each other as well).
See the chart below.
If we entertain the idea that the dot-com bubble can tell us about the crypto bubble, THEN:
If Bitcoin (and more generally cryptocurrency) is a typical bubble like the 2014 or dot-com, then this next leg should go up, fail before reaching $11.6k, and then come back down to about September – October levels (yikes).
Then it should form a double bottom, gear back up, and then fail that attempt at a rally (that would take months to play out converting real years to crypto years).
Then lastly, the next attempt would be a success that would blow the 2017 rally out of the water (a glorious and absurd fractal that will leave everyone forgetting about 2011, 2013, 2017, etc.).
As you can see, the NASDAQ is currently itself creating a fractal (recreating the first part of the chart, but bigger; also yikes by the way).
If Bitcoin does this, then this is how we get those $50k – $100k by 2020 cases.
It would be absurd for the bubble to play out again exactly how the dot-com or 2014 bubbles did, but bubbles are born from human behavior so they tend to appear similar.
From this perspective, it makes sense to be cautious today, but be excited long term. Now, of course, 2014 doesn’t have to play out, and this isn’t the dot-com (also, the current NASDAQ bubble doesn’t HAVE to pop). Don’t assume the rest of the bubble will play out as we have imagined here (for entertainment purposes). Keep the thought in the back of your mind that it has so far and proceed accordingly. If it were me I’d be excited now, but excited about building a position for that next fractal in perhaps 2020, at least in this theoretical world we have just discussed).
TIP: See a chart of where Bitcoin is at now to get a sense of where we are at this point. Until March 20, 2018, the Bitcoin chart looked startling like the NASDAQ in the chart below, which shows the decades surrounding the dot-com bubble. That could change, but for now, it is worth noting.