The value of bitcoin, development and future: not the tulip bubble, but may still speculative mania

The value of bitcoin, development and future: not the tulip bubble, but may still speculative mania

Recently, bitcoin soared is normal.

Of course, not normal is one of bitcoin attractive. Bitcoin has redefined the concept of money, created a scarcity of digital assets so far does not exist. So it is very difficult to maintain a “normal” asset standard.

Record earnings is of no great importance. The more important question is: “what with bitcoin?”. The same asset class comparison is especially tricky, and without any encryption currency benchmark to determine the value of precedent, which makes them difficult to be valued.

It is difficult to make the valuation of our dilemma, investors must at least try to buy enough of the value of the assets in the form of digital recording. According to the definition of value comparison, any rational assessment of the value of things must be compared with other things of value. The intrinsic value is a relative concept.

Comparison of tulip bubble

It is worth thinking about the value of.

Three weeks ago, when the bitcoin worth only $7000, according to ConvoyInvestments, other assets showed only one more than the price of bitcoin in the history of Holland is notorious among 1619-1622 tulip mania.

Most financial professional students know the end is not good, tulip mania.

Although many critics cite bitcoin tulip bubble metaphor is a bit cliche, but many optimistic bitcoin people will laugh at their instinct refer to it – which is often similar to that of simple.

WilliamMallers last week in a fierce rebuttal financial blog JohnLothian bitcoin futures plans to introduce on Chicago’s criticism.

The problem is, this often misunderstood critics retort based on bitcoin far-reaching social potential, do not get the main point, that this is a kind of useless things like tulips.

Tulip bubble problem is not the bulb of no value, but because of fanaticism, speculation and missed the fear cycle, the prices far beyond their true value. That a similar phenomenon is promoting bitcoin prices far beyond their unproven potential, it could be powerful.

Avid investment psychology

I was most worried about the group of investors frenzied investment psychology, shouting “to the moon” slogan, and simple to justify the price.

For example, the scarcity of bitcoin will boost its price rise indefinitely; long-term prospects: Although there is no bifurcation of the bitcoin core technical improvements, but offers a wide selection of the future for investors.

If they find these bifurcation more attractive – who can not have a better idea? This is not important, because only 21 million of the total bitcoin.

Bitcoin investment culture immature problem is not that it will make adjustments to the market. This limits its use of technology to replace the more social basic values.

Speculation is inevitable, speculation can even guide innovation. However, if bitcoin to change the lives of billions of people, so it needs to become a more mainstream asset class, such asset classes should contact with the real world. Although we may love such a strange, unusual “money honey badger”, but bitcoin need to become more normal.

It needs to be more stable, need a two-way market.

Financial professionals will bring us a two-way market. These people will be in the “CoinDesk employment consensus: show up investment investment conference” on Tuesday. At the same time, the risk of investors and hedge funds are making investments, bitcoin and other encryption currency assets for active investment; investment banks and exchanges are creating the infrastructure for other institutions to invest.

The future of bitcoin futures

For bitcoin bulls, they welcome the CME group plans to launch bitcoin futures contracts before the end of the year, this is a simpler way to get institutional investors as a prudent investment in the industry.

Contract, the pursuit of the rate of return on investment fund manager trading this quarter, unlike any bitcoin long-term holders that bitcoin have faith. Now they can short the market in futures contract.

If this makes sense, they will be glad to take action to push prices lower. Wall Street people are pragmatic and egoism, obsessed with short-term. They will not hold bitcoin.

It is not clear that this will have a large direct impact on bitcoin futures trading on the spot market, CME’s contract will be settled in cash, this means that the actual ownership of both parties will not have related assets. Investors will only bitcoin market as a reference.

But with the futures market liquidity, with the further development of cross market hedging strategies, CME futures prices could become a driving factor in the spot market prices. Because of the imbalance between the institutions and the size of the retail market, this is likely to happen.

The fact is: This is welcome. By reducing the volatility will increase the effect of bidirectional institutions involved in bitcoin of the world.

This is an important step to realize the goal of bitcoin. But this also means that the price of bitcoin will be postponed to the moon “”.

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