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Investors bitcoin step on the old rake

    Investors bitcoin step on the old rake
Sir Isaac Newton can and has radically changed our knowledge of the world, but he also had shortcomings. He, too, was drawn into the soap bubble of the "Company of the South Seas", which was his time mania. Because of this, the scientist lost a lot of money.

"I can calculate the motion of celestial bodies, but not the folly of people," Newton said.

Looking back, he should have thought about a popular statement that was used as a simplified version of his law of gravity: "What rises must fall."

Investors in bitcoin are just re-learning this old truth. This is written today by The Economist. Last month, the price of crypto currency reached a maximum of 19 thousand dollars. But then the rate fell even below 10 thousand.

Perhaps the best way to understand the essence of bitcon, if you recall the model of soap bubbles. The classical model, developed by Hyman of Minsk and supplemented by the historian Charles Kindleberger, has five stages: a shift, a boom, euphoria, financial failure and resentment. The shift was a certain technological progress, which can be used to justify the "new era". In due time this stage was given impetus to different technologies, for example, the railway, canals, the Internet or now blockade. Then comes the boom, which attracts more and more investors. At a certain stage, euphoria begins. It happens when everyone knows about the boom and the society talks a lot about those who earned millions. This stage came on the last November, when the advertising of freight traffic appeared in the train carriages and on the air of popular radio programs.

At the stage of euphoria, people buy, because others are buying and because they expect to sell soon purchased at a higher price. For some time the trend supports itself. And then, at a certain stage, doubts arise. Some people decide to take their income while they can. There are bad news. In the case of bitcoin, they became reports of South Korea's intentions to crack down on crypto-currencies.

As soon as the price starts to fall, psychology changes. People who bought in the early stages and counted their millions, suddenly noticed a gap in their wealth. It turns out that it does not cost anything unless certain conditions are met. Other people could buy bitcoin at an inflated price. And now they are very sorry about their mistake. The opportunists enter the trade for a little while, forcing prices to rise. But then such buyers and sellers leave.

The stage of "financial failure", most likely, has not yet come. But it is possible that the world is approaching it. Doubts about the reliability of Crypto-currency can cause a new sell-off. Then the price may begin to fall at the same rate as it grew. Investors can understand that bitcoin has not become a tool for daily recounts, as well as a reliable value repository. And the limited offer криптовалют does not promote their distribution.

Electronic assets without a flow of income are very difficult to assess. Because of this, it is difficult to determine their highest price during growth, but also the bottom of their fall. But when humanity learns this, we will be at the stage of "disgust".

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