Bitcoin breaks through $50000! Compared with tulips, is bitcoin the biggest financial bubble?

Source: after the outbreak of capital jet lag, many things in the financial market are constantly refreshing their cognition! What is bitcoin? The most intuitive expression is a string of numbers. Is a string of numbers valuable? It’s hard to answer. But one thing is undeniable, it has a price, and the rise is fierce. On the last day of the Spring Festival holiday, bitcoin renewed its cognition again, and its price broke through $50000 in one fell swoop! According to the data, the price of bitcoin reached $50110 and $50240, respectively, according to the quotation of coinbase on the San Francisco exchange and bybit on the Singapore crypto derivatives exchange! When bitcoin first appeared, it was branded with bubbles, scams and madness. After the outbreak, bitcoin prices soared again, breaking through the $20000, 30000, 40000 and 50000 marks in just four months. Today, the price of a bitcoin has risen to 320000 yuan, almost enough to buy a house in a small county. At the same time, a view emerged: bitcoin is the biggest financial bubble in history, far more than the Dutch tulip bubble. There are many people who firmly believe in this view, and many even put into practice, not letting go of every opportunity to short bitcoin. However, the craziness of bitcoin price has made them pay a heavy price. According to bitcoin, more than 116000 people have burst into positions in the last 24 hours, with a capital of more than 3.5 billion yuan. Bitcoin is bound to go down in the history of finance. There is only one question: will it go down in history as tulip or gold? 01 let’s take a look at the trigger factors of bitcoin’s boom. The most direct factor is that Elon Musk has a planned, step-by-step boasting, constantly attracting attention and guiding public expectations. Elon Musk first kept blowing dog coins on twitter. What is dog coin? It was developed by Australian entrepreneur Jackson Palmer in 2013 to ridicule the various cryptocurrencies or “counterfeit currencies” of the time. That is to say, from the beginning, dog money is the most rubbish, the most worthless digital currency. The problem is, with Elon Musk’s hype, the price of the cheapest dog coin has soared, soaring by more than 80%. Then Elon Musk asked for credit: you’re welcome. In the world of digital currency, the leading currency is undoubtedly bitcoin. After Elon Musk blew up the junk digital currency, the price of the leading digital currency was also very strong. In addition, Tesla announced that it has purchased $1.5 billion worth of bitcoin and is expected to soon begin accepting bitcoin as a payment method for its products. Even MasterCard, bny Mellon and counterpoint global of Morgan Stanley have announced plans to accept some digital currency transactions including bitcoin later this year. More and more Wall Street giants have entered the field of digital currency, which also means that cryptocurrency has been endorsed by more and more old Wall Street financial institutions. As a result, bitcoin prices soared to more than $50000. What are the similarities and differences between bitcoin Carnival and Dutch tulip bubble? 1. Price increase. There are many varieties of tulip, and the price of each variety is different. Correspondingly, their increase is also different. Like the digital currency world, there are many kinds of digital currency, from dogcoin, which mocks digital currency, to bitcoin, letcoin and other leading digital currencies. The biggest increase was in a tulip called Switzers, whose price rose 30 times before the crash. What about digital currency? The increase is much more fierce than this! When bitcoin started, 10000 pieces only bought two pizzas. In other words, the price of a bitcoin was only a few cents. Now? Fifty thousand dollars. The price of bitcoin has gone up hundreds of thousands of times! Digital currencies, including Wright coins and so on, have basically increased by tens of thousands, hundreds of thousands of times. So, there is a fact that from the perspective of price increase, the madness of digital currency far exceeds the tulip bubble! 2. It’s expensive. The most expensive tulip variety, “eternal Augustus”, has a maximum transaction price of 6290 guilders. Now the most expensive digital currency, bitcoin, costs $50000. From the absolute price point of view, compared with the tulip bubble, this round of digital currency is more crazy! 3. Crazy background. In the early days, the Dutch currency was gold and silver, almost full gold and silver. In 1581, the then Estates General of the Dutch Republic established the silver guilder as the currency of circulation. According to this rule, a silver guilder is equivalent to 20 stuivers, and stuivers are equivalent to 8duit or 16penning. Later, new coins appeared, including Daalder (1 shield or 30 stuiver), rijksdaalder (2 shield or 50 stuiver) and ducaton (3 shield or 60 stuiver). Among them, the name of Daalder comes from the German Thaler, a silver coin name and monetary unit that has been used almost all over Europe for more than 400 years. When is the peak of tulip bubble? 1637. What do you mean? The Dutch currency changed from the original full gold and silver to the unified currency, with conversion companies in the middle, and then to the emergence of new currencies. In this process, bad money will drive out good money, which will damage the credibility of the currency. More than 50 years after Dutch currency reform, tulip bubble appears! What is the background of bitcoin craziness? It can be traced back to the collapse of the gold standard and the collapse of the Bretton Woods system. Now, it’s almost 50 years. Relatively speaking, the Dutch tulip bubble monetary system, even if the phenomenon of bad money driving out good money, currency credibility is extremely strong. In the era of French currency, the French currency is extremely lack of credibility. One of the most important goals for us to invest in is to win m2 and devalue the currency. Is there a bubble in bitcoin? How to measure bubbles? In absolute terms, the price of bitcoin has indeed risen violently, hundreds of thousands of times, and the price is 50000 US dollars. Can we say that bitcoin has a bubble? Let’s look at it from another angle. At the height of the tulip bubble, the price of an “eternal Augustus” tulip was worth a luxury house in Amsterdam. Now bitcoin costs $50000. What’s the price of a luxury house in New York? At present, the median house transaction in the United States is about $300000, while the price of a luxury house is $860000. Almost 17 bitcoin can buy a luxury house, and 6 bitcoin can buy a house. So, if you anchor the value of luxury housing, by the standards of Holland and the height of the bubble, is bitcoin at its craziest? Far from here, even bitcoin has no bubble! If you think about another question, do you all find that everything has soared recently, from the price of financial assets to the price of physical consumption. House prices, commodities, grain, meat, Maotai share price, Tesla share price, etc., are soaring. From a different perspective, bitcoin is a string of numbers. The current French currency exists in the bank account, which is almost a string of numbers. The form is the same, just numbers. Well, we can use bitcoin to measure other prices. If asset prices are measured in bitcoin, is there a bubble? No, Similarly, in terms of Maotai and Tesla shares, there is no bubble in many asset prices. In the past, how did you judge that prices were soaring wildly? From the perspective of French currency, US dollar, euro, etc. But let’s think about it. If a person is crazy, maybe it is the person who has problems. But if everyone is crazy, is there something wrong with our criteria for judging madness? Similarly, if a price goes crazy, it may be that the asset has bubbles. But if all the asset prices are crazy, is there a problem with the standard of measurement? So, in the final analysis, it is the French currency that is having a problem: it is not the soaring asset prices, not the soaring prices, but the devaluation of the French currency. Asset prices and prices are OK, the problem is French currency! Looking back on this wave of bitcoin skyrocketing. In fact, the price of bitcoin has soared from US $10000 to US $40000. The core factor is that the US dollar liquidity is rampant. First, the Federal Reserve released a huge amount of base currency, and the size of its balance sheet soared to $7.415 trillion, a record speed and scale. In the whole history of mankind, it is very rare to put money on this scale. More importantly, after the end of the outbreak, the society began to operate and the speed of money turnover accelerated. The dollar in the market = base currency * currency turnover. As a result, the liquidity of the U.S. dollar is rampant, and all asset prices are soaring. House: according to the National Association of Realtors, the median price of a single family home in the United States rose 14.9% by the fourth quarter of 2020. That’s the fastest growth rate ever, according to data compiled by Bloomberg. Timber: the main contract of CBOT softwood futures once rose to $991.90/1000 board feet, a record high. Crude oil: has soared from – 37 dollars / barrel to 60 dollars / barrel! All price soaring is a monetary phenomenon! If we don’t use the French currency as the value anchor, many problems will suddenly become clear: asset prices and prices are OK, the problem is the French currency. And finally, in terms of French currency, what would trigger a bubble collapse? Time relation, this problem remains tomorrow.

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