For the last several weeks the set of cautions about a price bubble in the field of cryptocurrencies has been written. Many of them as it is represented to me, are guided by excessively simplified analysis, having concentrated only on jump of exchange prices of the main tokens and the ICO madness which has captured all and drawing from this a conclusion that the prices just about have to fall.
Some very skilled investors speak in the same vein, but with a large amount of nuances: long-term potential is huge, short-term perspectives concerning the prices are unknown therefore be careful and don't invest money so that to be left without penny in case of the considerable falling of the prices. It is a piece of good advice.
What is created around release of new tokens in the form of ICO seems the true madness. Many of these new protocols or the applications using tokens have an interesting intention in the basis, but don't possess sufficient (or though some) the market proof of operability of the concept. On traditional investment metrics, a ratio "risk profitability" for many of these projects isn't reasonable to skilled investors. If you have no deep understanding of details of the new offered token and strong confidence in its true value, then it resembles gamblings more, than investment.
In my opinion BTC and ETH significantly differ. Is a lot of not clear in that, as for their success in a long-term outlook, however many risks were already excluded at the level of protocols of both networks. And that, and other network possess the dynamic ecosystem of developers distributed by form of ownership and high liquidity.
I would like to add to the existing information context three thoughts which as far as I noted, weren't widely adopted in case of discussion of this subject:
- Bubbles in the stock market – bad analogy for what happens to BTC and ETH. About an overvaluation of actions it is possible to claim reasonably proceeding from the predicted efficiency of business and the amounts generated by it as a result of money. During a bubble of dotcoms, the company under the name Internet Capital Group gained 70 million dollars of income, 150 million dollars of net losses and reached a market capitalization of 56 billion dollars. It isn't necessary to be the genius of mathematics to understand that this business will hardly be able to make the profit sufficient to support the value at the given level.
The bitcoin isn't comparable to this example as it is the unit of value which isn't depending on any indicators of profitability or the production purposes – his total amount of issue isn't tied to economic efficiency. Some investors as Warren Buffett, are negative to such assets as Bitkoin or gold, and avoid to make investments in the assets which don't have tools for generation of a cash flow.
But the fact that it is monetary unit, means also that the value of Bitcoin can grow considerably more in high gear, than actions of most the real companies because she isn't tied to creation of products or services and depends only on that how many people consider it worthy means of preservation of cost. The world considers that gold is a well-tried remedy of saving of the capital of trillions of dollars. When and if the world comes besides to a conclusion concerning Bitcoin, he costs in hundred or even in one thousand times more, than today, and it can occur at any speed of inflow of new users.
The fact that growth of the price of BTC and ETH caused by inflow of new speculators really is "пузырём" which can burst probably truly. However, unlike bubbles in the stock market, inflow of new buyers to an ecosystem of electronic currency directly promotes increase in cost of the token which is its cornerstone. Value (on condition of the limited volume of issue) is defined only by shortage level and will depend directly on that how many people hold currency. The next buyer of stocks of Tesla doesn't increase liquidity of the main business in the long term, but each new speculator recognizing Bitcoin value promotes growth of its price. In case of success of Bitcoin, a number of turning points when its price sharply increases after long consolidation in a fleta will take most likely place.
If you are sure in the potential of BTC or ETH of the long term, then, in my opinion, trade in tokens on the basis of short-term fluctuations of their course is short-sighted. Yes, it is possible, you are clever or successful, and you will earn some quantity of fast money, but if you have come to this market because you see the potential of growth of this currency in 100 or 1000 times, then "fixing of profit" on the short movements is similar to collecting of a trifle before a skating rink. What if Warren Buffett or JP Morgan decide to surprise the whole world and will be declared tomorrow large investments into Bitcoin owing to what its price in a night will grow by 10 times and any more it will never be rolled away on the previous level? If at the responsible moment you appear out of the market, then you will regret for it.
Source: cryptocurrency.tech 