When prices start soaring in tech, it’s inevitable that you’ll start hearing the term “bubble” bandied about. It happened with dot-com in the late 90s and early 2000s, a couple of years ago, everyone thought it was happening with social media and now some think Bitcoin is going through a bubble.
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Prices in the virtual currency have surged over the past few months, recently hitting US$100 after trading below US$35 in early March and US$15 in January. Less than a year ago meanwhile, the currency appeared to be in free fall with no end in sight.
It certainly looks like a bubble, but according to an analyst ConvergEx group chief market strategist Nick Colas the rapid rise of the virtual currency is actually “a perfect storm”.
Speaking to Business Insider, he said:
The reaction from clients has been pretty uniform: it must be a bubble. Too far, too fast, too new… you get the idea. Moreover, it’s very hard to short Bitcoins, so there’s no real way to express that pessimistic point of view, which is saving a lot of people some real money, since Bitcoin has some solid momentum just now.
Among the things in Bitcoin’s favour, says Colas, is the fact that a new generation of tech-savvy users don’t feel any less certain about trusting their wealth to a virtual, open source piece of software than a bank, the broken state of the global banking system, worries over heavy taxes and a naturally constrained and predictable supply through the issuance process.
If this virtual currency is to keep riding this wave though, it needs to gain more mainstream acceptance as a means of payment by businesses around the globe.
Image: Brocken Inaglory (via Wikimedia Commons) .
