Bitcoin Bubble is Bursting and Has a Long Way to Fall

Despite losing 40% in a matter of weeks the cryptocurrency still has further to drop according to experts at Capital Economics..

Bitcoin has all the hallmarks of a classic speculative bubble and even after almost halving in value in a matter of weeks it still has further to fall, according to a leading team of economists.

As regulators in South Korea again signalled on Thursday that they were considering a ban on cryptocurrency exchanges, Capital Economics also dismissed claims that bitcoin and its imitators could replace established currencies as “rubbish”.

Bitcoin, which rose to more than $19,000 in December, recovered by 18% on Thursday after suffering heavy losses in the preceding two days.

Its value was sitting at $11,560 on the Luxembourg-based Bitstamp exchange shortly after 2am GMT. Other cryptocurrencies include Ethereum and Ripple.


What is bitcoin and is it a bad investment?

Bitcoin is the first, and the biggest, “cryptocurrency” – a decentralised tradable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption – or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.