The Big Bitcoin Bubble – Fantasy Or Reality?

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Right now the hype around bitcoin and all cryptocurrencies in general is real. Last year on December 1st bitcoin, for the first time, broke the $10k USD barrier, resulting in a lot of media coverage not only online, but on national television and radio programs alike.

Since then, the price for one coin has increased even faster and sky-rocketed to more than $19,000 USD a week before Christmas. Currently, bitcoin fluctuates at around $14,000 USD.

BTC/USD Overview

BTC/USD Overview – Screenshot taken from investing.com

Proponents that are heavily invested in bitcoin predict that the digital currency will climb to virtually unknown levels, while skeptics remain cautious and warn against a big bubble that is soon going to explode and will cost especially the smaller investors all their hard-earned cash.

Who’s right and who’s wrong? Let’s hear to what some of the most well-known experts in the field have to say…

Bitcoin Advocates

We start with three bitcoin advocates that have put some of their own money into the game in its early beginnings.

James Altucher

James Altucher is a popular blogger, entrepreneur, angel investor, chess master, and author of the Wall Street Journal bestseller ‘Choose Yourself’.

He has put together a team of experts to analyze many of the countless new cryptocurrencies that enter the market almost on a daily basis. Altucher is heavily invested in those currencies that have the best potential to establish themselves in the long run.

During his appearance on ‘Squawk Alley’ on CNBC, Altucher was asked about his thoughts on the future of the cryptocurrency market and what it’s going to look like. He said:

‘There is 200 billion dollars with the cryptocurrencies out there, but there’s 200 trillion dollars of demand for money out there. So, if bitcoin is truly solving the problems of paper and fiat currency, which I believe, you are going to see that 200 billion start to move up to 200 trillion. (…) Long-term this price action is certainly not unreasonable and it’s going to continue to go higher.’

Later Altucher also warned that ‘there are so many bogus cryptocurrencies out there. 95 percent of these alternative cryptocurrencies are probably scams. Bitcoin is not one of them. Bitcoin is legitimate.’

Mark Cuban

When being interviewed by Bloomberg TV anchor Emily Chang at the Vanity Fair New Establishment Summit in Los Angeles about his opinion on bitcoin and blockchain technology, billionaire investor and Dallas Mavericks owner Mark Cuban answered:

‘Its (Bitcoin’s) value is a function of supply and demand. It doesn’t really do anything else. I have bought some. (…) I’m also involved with ICOs, actually token sales, because I think blockchain is a great platform for future applications.’

Mark Cuban by jdlasica, on FlickrInvestor Mark Cuban – “Mark Cuban” (CC BY 2.0) by jdlasica

Peter Thiel

Billionaire and PayPal co-founder Peter Thiel believes that people are still underestimating the value of bitcoin. On FOX Business he said:

‘While I’m skeptical of most of them (cryptocurrencies), I do think people are a little bit maybe underestimating bitcoin specifically. It’s like a reserve form of money. It’s like gold and it’s just a store of value. (…) There is about 70 billion dollars worth of bitcoin in the world. There is 9 trillion worth of gold, and if bitcoin ends up being the cyber equivalent of gold, it has a great potential left.’

Bitcoin Opponents

To balance it out, let’s now listen to two famous men that have made a lot of money investing in stocks, futures, and the like.

Jordan Belfort

When being asked why he believes that bitcoin is a fraud when there are real transactions taking place, real-life Wolf Of Wall Street Jordan Belfort said in an interview aired on CNNMoney:

‘I think it’s a huge danger right now, that people are looking at it like this is the next great thing. It’s a bubble for sure. (…) Next stage (…) there will be a short squeeze, it’ll be going a bit higher and eventually, though, it’s going to come caving in. It’s almost a guarantee.’

Regarding what he thinks the problem with bitcoin currently is, Belfort stated:

‘There is two parts of manipulation. The first part is you have to create demand. That’s happening right now via social media. Every day I get random emails (…) with these crazy promotional ads to generate interest, but at the same time there is limited supply. There is really not that much bitcoin that is out there. So what’s happening is you have very limited supply. They might say the market cap is a couple of billion dollars, but how much is actually trading out there in the marketplace? How much does it take for a bitcoin to go up? Not that much. And that’s why it’s shooting up so quickly and what happens is at a certain point it has to reverse itself.’

DSC05762 by Ralph Zuranski, on FlickrReal-Life Wolf Of Wall Street Jordan Belfort – “DSC05762” (CC BY 2.0) by Ralph Zuranski

Warren Buffet

Everyone who is only remotely serious about investing money as a business has heard of Berkshire Hathaway chairman and CEO Warren Buffet. Buffet’s opinion is always highly valued by his billionaire colleagues. Here is what he recently said about cryptocurrencies:

‘In terms of cryptocurrencies, generally, I can say almost with certainty that they will come to a bad ending. (…) If I could buy a five-year put on everyone of the cryptocurrencies, I’d be glad to do it.’ – Source: CNBC

When asked whether or not he’s currently holding a position on any of the currencies, Buffet said:

‘I get into enough trouble with things I think I know something about. Why in the world should I take a long or short position on something I don’t know anything about?’

Nobody Really Knows?

It looks like nobody really knows for sure where the cryptocurrency market and bitcoin in particular is heading. We have heard good arguments from both sides of the table. You have to take it from here and decide yourself, which camp you trust more and want to belong to.

One thing is for certain, though: Almost all experts are convinced that blockchain technology will play a major role in our future.

Last but not least, a word of warning:

Considering the current market volatility, it’s obvious that putting money into any of the cryptocurrencies is less of an investment and more of a gamble at this point.

It’s a high risk – high reward game that’s being played right now. Therefore make sure that you only invest as much money at any given time as you definitely can afford to lose.

Have you invested some of your money into bitcoin, and do you still sleep well at night? Please tell us about your opinion on cryptocurrencies in the comments below.