A Bubble is a financial term used not only in crypto (but in real estate, dot coms, and tulip flower sales) to describe an asset, or entire market, significantly appreciating in price, at an inflated level, and not reflecting the asset’s or market’s real value here on Earth.
“The bubble bursting” refers to when those inflated prices can’t be sustained, and the asset’s price comes crashing down hard.
Many skeptics think that cryptocurrencies, especially bitcoin (BTC), are a bubble, and are actually worth nothing at all.
The primary argument for that opinion is that cryptocurrencies are good for nothing more than speculation and can’t even be used to buy a pizza.
Many market participants will argue that the crypto markets have already been through bubbles and crashes, starting all the way back in 2011 and continuing to the present.
Notable “bubbles” and crashes
- 2011 boom and crash – bitcoin (BTC) fell from US $1.06 to Us 0.67. By June the price went up to nearly $30, only crash to $2.14 by November
- 2013 followed by 2014-2015 crash – 2013 endly with Bitcoin trading at $1,127, dropping almost $1,000 to $172 in January of 2015
- 2017 boom and January 2018 crash – Known as the 2018 cryptocurrency crash, most cryptocurrencies started to sell off right after the New Year. Bitcoin fell 65% in the span of 1 month between January and February. Almost all other cryptocurrencies fell by 80% from their peak values. bitcoin (BTC) ended the year at $5,500.
- 2020-2021 boom – bitcoin (BTC) fell 30% to $6,200 in March of 2020. By October it had rebounded all the way up to $13,000. 2021 marked a significant time for Bitcoin. It traded to over $40,000 in January and reached $66,974, a new ATH, in October of 2021.
- 2021-2022 crash – The end of 2021 started the fall of the crypto markets from their 2021 peaks in May, September and November. Bitcoin dropped 30% from its peak, and Ethereum dropped 23%. 2022 is most notable for the collapse of the Terra Luna ecosystem, including TerraUSD and Luna. This started a cascade of other crypto financial services companies going bankrupt or needing to halt customer withdrawals, affecting companies such as Three Arrows Capital, Genesis Trading, Blockchain.com, Celcius, and Voyager Digital.