Quote from: ktabb on June 06, 2017, 10:31:33 AM

Quote from: DOGE12321 on June 06, 2017, 03:23:38 AM

Now it is evident that Bitcoin price is at an all-time high. Prices have risen steeply, far too fast for my liking. I don't think such a growth is sustainable. The bubble is going to break very soon.

But what is causing such a price hype? I speculate this phenomenon is caused by the increase in the number of Bitcoin users. Hence, demand increases and supply dwindles. Thus price increases. Are there any other factors that could add to this price hype?

This is a good question. Most of the people here are so in denial that they won't even admit that this is a bubble, so it is refreshing to hear somebody who does recognize the reality of the situation.

The reason for the bubble is the nature of bitcoin investors. I wrote a post sort of related to this recently:

http://www.demoinvestor.com/articles/00000001
Organizations and fund managers on Wall Street have not begun to consider Bitcoin as a reasonable investment as far as risk versus reward goes, and rightfully so. Experienced investors prefer assets that either have a long history, or whose value can be measured by fundamental data about the asset. Bitcoin is severely lacking in both of these areas. As a result, the price is driven up and down by retail investors trying to get rich quick, who do not know how to invest. They fall into buying and selling frenzies far more easily than institutional investors would, which causes snowball effects to build up easily.

This basically describes what I believe is the reason. Bitcoin has historically consistently formed bubbles. This is because of the nature of bitcoin investors. They are retail investors who want to get rich quick. They are inexperienced and usually investing small amounts of money. They are basically just weaker hands who jump on board with buying and selling frenzies very easily.

If you read the article, you'll see that I mention a solution. The solution is that bitcoin needs to earn the trust of institutional investors. I am not sure that there is not a whole lot that can be done to achieve this other than wait.

I dont think you can compare investing in Crypto currencies to
investing in stocks and commodities. Crypto or to be general Bitcoin
is accessible to small money holders and large, anybody after jumping
through the usual security hoops can invest $50 or without any
security or identity verification for $15.

Lets see how anyone fairs out investing in bank shares with that amount!

Its because of its accessibility why bitcoin's value fluctuates and not everyone
is involved to get rich quick there are plenty of long term investors.