Will the bitcoin bubble burst?
Bitcoin 'not seen as a currency for transactions' says expert
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Bitcoin has been trading within a very narrow range since late June, while volume has also been waning. The digital coin is currently in a fairly stable place but many investors and experts believe this is a sign more volatility is on the way. But could the bitcoin bubble really burst soon?
Cryptocurrency has taken the financial world by storm in recent months, but many experts believe the bubble could soon burst.
The crypto market is extremely volatile and changed a lot based on recent social trends.
The impacting factors include the climate implications of digital coins and comments from Elon Musk.
The SpaceX founder has become increasingly sceptical about Bitcoin in recent days and earlier this year announced Tesla would be getting rid of Bitcoin as a way to pay for purchases.
Cardano’s ADA leapfrogged bitcoin to become the most held in the second quarter of 2021 – rising 51 percent on the previous quarter.
Previously bitcoin led the cryptoasset bull run at the beginning of 2021.
But the digital coin remained popular with a 41 increase in demand.
The new eToro data appears to show investors are becoming increasingly confident in smaller cryptocurrencies and therefore bitcoin is losing some of its market dominance.
Simon Peters, crypto market analyst at eToro said: “During Q2, Cardano provided a clearer roadmap for its upcoming Alonzo hardfork – currently in a testing phase.
“If successful, it will bring smart contract functionality by allowing the writing and deployment of smart contracts for the first time on the Cardano blockchain.
“This upgrade will be significant as it will enable developers to build projects on the network, helping Cardano to position itself as a real ‘competitor’ to the likes of Ethereum.
“The price of ADA climbed 15 percent over the last quarter, suggesting investor optimism around the Alonzo hard fork and Cardano’s ability to challenge Ethereum long-term.”
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Bitcoin is currently in a period of consolidation which began on Monday.
The price of bitcoin currently stands at $33,893.14 (£24,584.05), which is 0.64 percent down in the past 24 hours.
This is a 6.41 percent drop in the past seven days.
The global cryptocurrency market cap is currently at $1.43 trillion (£1.04tn), falling by 0.57 percent in the last day according to CoinMarketCap.
But will the bitcoin bubble burst?
Kevin Brown, savings specialist at Scottish Friendly told Express.co.uk: “The bitcoin bubble we are seeing currently is reminiscent of the dotcom bubble we saw burst, with terrible ramifications, in the early 2000s.
“Bitcoin and other cryptocurrencies have risen to prominence recently due to the huge number of retail investors essentially gambling on the assumption that they will be able to sell on to other people buying in.
“The worry is that no one ever talks about the losers of a bubble bursting or gives a warning of what could happen, at least not until after the event, when it’s too late.”
He added more education is needed to warn investors about the possibility of the bubble bursting.
Mr Brown told Express.co.uk: “Not everyone will lose out but we should be doing more to warn younger generations who are investing in crypto that the bubble can burst.
“Ultimately, the FCA should be taking responsibility for this but it shows little appetite to do this and has so far given no consideration, and made no plans, for the potential collapse of digital currencies.
“If this were to happen, it risks destabilising consumer confidence in other forms of investment too.
“The last thing we want to happen is for anyone to be put off investing because they suffered heavy losses and harbour resentment towards the industry for a lack of warning.”
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