What is it that makes investors and traders so keen on the virtual currency called bitcoins? It may be the fact that unlike traditional currencies, this digital asset is prone to increasing in value considerably without a corresponding increase in demand. It is this lack of demand that is causing potential investors to jump into this bubble which has been growing by the day. And just like any other bubble, this one too will burst; this article examines just how soon the bubble will burst.
The biggest fear that many investors have regarding the future of the cryptocurrency called bitcoins is that it could become centralized. There are many analysts who believe that there are investors and traders who control most of the wealth in the world. They argue that because the supply is limited, the supply will never exceed the number of buyers, or miners. If this were to happen, the power structure of the decentralized ledger and the chain would be upset, leading to an overflow of investors’ wealth into the hands of a small group of powerful interests. This is referred to as centralization, and investors who are scared of this possible outcome should stop buying and trading at the moment.
While the decentralization argument is most likely coming from those who benefit most from the system being scarce, it is also causing a great deal of fear among potential investors. But this is how the bitcoin bubble will burst, because if there is no more demand for the digital asset class then the investors panic will only cause the value of the asset class to fall even further. In the end, even if there is a large influx of new investors who purchase a large amount of bitcoins, it is highly unlikely that the supply will ever reach the number of investors panic. And when there is a large inflow of investors, the price of the bitcoins will go up because the supply is limited and the demand is high.
As the bubble continues to grow and grows, the number of users will become smaller. This will cause another dilemma for the system. If fewer users are logging on to the net, then the virtual asset class will become more scarce. In this scenario, the bitcoins will continue to expand in price, causing the investors panic. As more investors are forced out of the market by this phenomenon, the supply will fall again and the buyers of bitcoins will again start pushing prices upward. It is at this point that you may see the investors panic for real, and the bubble will burst.
The biggest fear that investors have about this situation is that they think it could happen before the value of the digital asset increases. This is similar to thinking that a fire may break out in your home before you put money in the bank. There is always a chance that the situation might occur, but you can prevent it from happening altogether by taking some precautions. It is quite possible that as long as there are traders on the net, the number of people panicking about the bubble will be reduced.
Some people have even said that they will never enter the market due to the high risk. This is similar to the situations that investors had in the stock market when the market was going through one big boom and many people were rushing to buy up stocks. However, you should not let such fears stop you from trading on the virtual market. There is still a lot of money to be made if you know how to go about it. All you need to do is make sure that you do not panic and enjoy the ride while the digital asset continues to expand in value.