Understanding the Crypto Bubble: Myth vs Reality

The crypto bubble refers to the conditions where the cryptocurrencies exceed the underlying or the expected values under certain conditions. Similar to a real bubble, the crypto prices will rise (as the bubble rises in the air) before bursting (falling). 

Several factors build this crypto bubble, and similarly, various factors lead to the bursting of the bubbles as well. In this blog, let’s discuss the history of crypto bubble works and the myths associated with it. 

Is Crypto Bubble Real?

The Crypto bubble is indeed a famous term among crypto investors. It has a history to prove its existence. A bubble is in almost every industry where a particular asset will rise before falling. 

An investor once connected the crypto bubble to the dot com bubble, which happened during 1995-2000 when the demand surged to the peak, and thousands of internet companies were booming along with technology. But that didn’t last long, as the bubble burst, and only a few could survive and are dominating the market now. 

Also Read: Meme Coin Rise Historical Data Reignites Fears of Crypto Bubble Burst

Another example worth considering is the housing or real estate bubble in 2008. The industry was booming, and people believed the housing industry was the future before the banking sector collapsed, bringing along the real estate bubble. 

FOOD FOR THOUGHT💭
This crypto market sort of reminds me of the “dot-com bubble”. Don’t get me wrong I am BULLISH – but there’s a connection I’m seeing.

During the dot com bubble ‘1995-2000’ there was 100’s if not 1000’s of internet companies rallying and tech was booming, but…

— Joelhman (@JoelHman_Trades) March 2, 2024

Crypto Bubble History

Up to now, four instances have happened, which are said to be proof of the existence of the crypto bubble. The times when the crypto prices fell, many called the crypto itself a bubble, including the Warren Buffet. These fall or crypto bubble bursts are attached to factors like investors’ sentiments. If mass investors rushed to sell a particular crypto, the price might collapse instantly, calling it the fall of the crypto bubble. 

The first bubble is considered in 2011 when Bitcoin was hardly around the $1 mark in February but fell to 0.67%0.67 by April, but that’s not the bubble to mention. Later, the Bitcoin price reached $29.58 in June, and in November, it fell to as low as $2.14. 

The second time was when the Bitcoin price rose to $1,127.45 in November 2013 but fell to $172.5 by January 2015.

Also Read: Bitcoin Price is Down; Has BTC Price Rally Come to An End?

The most widely discussed is the 2018 crash, also called the “Great Crypto Crash.” By that time, many cryptocurrencies were existing in the market, and following the Bitcoin crash, they all lost their value. It happened in January of 2018 when the market crashed by 78%.  

The most recent crash was between the duration of 2021 to 2024. In November of 2021, Bitcoin surged to the ATH value of $69,000 on 10th November before falling to $16,530 in January.  During the same timeline, the Terra Luna crash also happened, where the crypto fell from $119.51 to $0.10. The crash was a big shock as the token was a stablecoin backed by the US dollar. Despite that, the price crashed heavily. 

Biggest Myth Associated With The Crypto Bubble 

Cryptocurrency has always been a topic of discussion where both the positive and negative sides are in front of everyone. With this much popularity, myths or false information get carried around easily, leading to confusion and fear among new investors.

Many believe the fall of the crypto market is inevitable, and with the next crypto bubble, it will fall to zero, completely shutting the market, which is not entirely true. There are possibilities of facing such scenarios where the market can collapse, but reaching rock bottom isn’t a promise. 

More than 2.2 Million cryptocurrencies are in existence. Out of these cryptos, some might vanish for real, but some will still survive and keep the market alive. The crypto market depends on various factors, and some volatility issues and failures don’t have the potential to collapse the $2.45 Trillion market.

Conclusion

Cryptocurrency is a bubble that has been the topic of discussion for years. Whether it is or not is a debate that won’t end anytime soon, but one clear thing is the existence of the crypto bubble and its impact on the industry. Up to now, several times, the crypto bubble has popped, bringing the value down, but never to zero. 

Read More About Early Signs to Spot Before the Next Crypto Market Crash