Don't Worry Steemians, There Is AND Will Be No Cryptocurrency Bubble

With the price of cryptocurrencies taking off, we hear the word "bubble" thrown around quite often. Before it was only Bitcoin that the talking heads on television were referring to but, now, we are starting to see it expand to the entire sector. Over the last month, we witnessed the total market cap go from $250B to $625B. That is a massive run up and cause for many to think that this is a bubble.

Of course, the term "bubble" is entirely subjective. There are no parameters for what defines a bubble. In fact, it is only an opinion. There is no way to test it other than to compare it to other bubbles. Yesterday's price action is only enhancing the view of a bubble since we took such a sharp turn down. That said, it must be stated that corrections are a natural part of markets and healthy. So, simply because there is a correction, that does not signify a bubble.

For this discussion, I am going to use the idea that a bubble is an advancement of pricing action that results in a collapse that takes a long time to recover (if it ever does). I know this is against what some debate but, sorry, I will not call the crypto world a bubble on Wed that led to a 35% pullback on Thurs/Fri. A bubble does not recover the price loss in a matter of days.

Another aspect of this is that bubble is a financial term. It is used to describe markets. Cryptocurrency is not financial, although that is one of its utilities. Instead, it is a technology which does not have bubbles. This is one of the most important things to remember. If you understand that bubbles do not exist in technology, then you will be a step ahead of everyone else when looking at this revolution that is taking place.

Some will point to the fact that while technologies do not bubble, the companies or assets pertaining to them can bubble. That is true. People like to put valuations on things and pricing action can always get out of whack. However, trying to apply that idea here is missing the biggest element of the cryptocurrency market and why it is impossible for it to bubble.

Before going any further, this discussion is referring to the sector in general. I am not saying that individual tokens will not see pricing that is absurd. There are pump and dump schemes. Pricing action gets outrageous on particular coins at times. Scams are taking place each day. This post is more of an aerial view as opposed to focusing upon individual tokens.

So what are people who think cryptocurrencies can bubble missing?

People with this view miss the fact that a cryptcurrencies cannot be separated from the blockchain. To say that cryptocurrencies are in a bubble is saying that blockchain is in a bubble which is impossible since blockchain is a technology.

What about pricing action that is representative of that technology getting ahead of itself?

This is where the subjectivity of a bubble comes in. Is your definition of a bubble something that exceeds its value for a short period of time or does it have to be long term? People called the US housing market a bubble; it took years to peak and was widespread. The dot com era was a bubble, again developing over years before collapsing. Was Tesla in a bubble because it ran up to $380 in a short period of time only to fall back to $290 before rebounding to $330?

Therefore, based upon the idea that a bubble is something that is a longer term run up in pricing followed by a collapse that see the new level of pricing far below the highs for an extended time, I will say it is IMPOSSIBLE FOR PRICING TO GET AHEAD OF ITSELF. There is absolutely no way for this to happen. Wall Street cannot put its hands on enough money quick enough to pull that off.

Ponder that for a second. Wall Street cannot put its hands on enough money quick enough to pull that off. That is an outrageous statement. Or is it?

The answer lies in the term "convergence". A few weeks back I wrote a series about the different aspects of the steem blockchain that is converging which is going to cause explosive growth. This situation gets more powerful when you extend it to the entire blockchain world. Every day, millions of people are doing something that adds to the totality of what is called "blockchain". This process is coupled with other factors like more people distrusting fiat/government, corporation implementation, renewables making mining more profitable, advancements in computing, and thousands of other things all converging together.

All these factors show why it is not outrageous to make the statement I just did. The present market cap is $600B. Wall Steet could pump that up 10 time over the next year to $6T and it would still pale in comparison. Blockchain is going to see thousandfold advancement over the next year. In other words, the pace of blockchain advancement far exceeds that of the money flow into cryptocurrencies.

The link between blockchain and cryptocurrency which cannot be broken is key. This is why we are going to see the greatest explosion of wealth in the history of the world. People who are getting involved now will not see Wall Street returns of 10% or 20%. Instead, we are seeing tenfold, hundredfold and even thousandfold increases.

Jamie Dimon and the other banksters new mantra is "we don't like bitcoin but believe in blockchain". Since bitcoin is an individual token, it can be separated out. However, replace that with the word "cryptocurrency" and the truth emerges. Sorry Jamie, you can't have one without the other.

Try to remember this the next time you are tempted to buy into the idea that cryptocurrencies are a bubble.

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