Bubble, pyramid, or new dollar: how Bitcoin turns out to grow

Most recently, Bitcoin reached its maximum value, its rate exceeded $ 6000, and even tried to rise higher. But this rapid growth a few weeks ago seemed impossible. And then, and now, pressure was exerted on the course by several negative factors, such as the actions of the Chinese authorities or rumors that the cue ball was outlawed in Russia.

Previously, negative news strongly pressed on the bitcoin course (and other cryptocurrencies too), after which the recovery of indicators to the previous level could take several weeks, or even months. Now, the negative only slightly lowers the course, which in a few hours can not only recover, but also exceed the original figures. But why?

Opinions of experts (and just holders of cryptocurrency) are divided. Someone thinks that Bitcoin and many other cryptomonettes are just a bubble that will burst if not in a couple of weeks, then in half a year for sure. Well, someone claims that there is no bubble: the cue ball is growing, because it is in demand, and this growth can lead to the fact that next year Bitcoin will cost $ 10,000 or even more.

Right can be the first and second. But so far, the Bitcoin rate and the dynamics of trading volumes lead to the idea that the cue ball is very similar to the “Giffen Commodity”. This term describes the product, the consumption of which increases with increasing prices. Experts say that usually the substitution effect of a price change is outweighed by the effect of the income effect.

If you take food, then most often the increase in their prices causes a decrease in sales volumes. For example, if you take meat, then when the price rises, they begin to buy less, the overall demand decreases. The same happens with the increase in prices for clothing, shoes and any other goods. But if you take the goods, without which it is difficult to do, then sometimes the opposite effect occurs. For example, when the price of bread in Russia rises, they start buying more. In China, Giffen's product is rice .

There is evidence that in the United States with an increase in gasoline prices, the demand for it increases, and consumption increases. At the same time, the cost of auto repair and other related things are reduced. That is, in this case, gasoline is also a product of Giffen.

But in most cases, Giffen's goods are inexpensive goods, and the population either can not do without them at all, or it is extremely difficult to do so. Giffen products may differ in different countries and regions of the same country, but in most cases their price is low.

What about bitcoin? It is neither cheap (almost six thousand American dollars for a coin), nor necessary. Without Bitcoin, a person will not die of hunger, will not freeze, will not lose his job. So why is this cryptomonet so popular?

In principle, for the most part, the dynamics of the course and the sales volume of the cue ball really corresponds to the usual understanding of how the Giffen product behaves. But the reasons here may be somewhat different. So, in some countries, bitcoins are bought because it is a relatively reliable way to protect funds accumulated in fiat currency. In the same China, the yuan exchange rate against the dollar is declining, and the Chinese have begun to massively buy the cue ball — who is in reserve, and who in order not to lose the last money.

In other countries, there is a similar situation. For example, in Zimbabwe, where the local currency is constantly rolling down. The same can be said about China (although the yuan's rate against the dollar is not falling as fast as the course of many other national currencies of other countries).


However, there are other factors where the easiest is to constantly increase the value of the cue ball. The more it costs, the more people are embraced by the desire to try to earn. And since many succeed, there are even more supporters to start working with Bitcoin.

So what's the truth?
Yes, the fact that Bitcoin can not yet be called either a bubble or a product of Giffen. The fact is that cryptocurrencies themselves are a new phenomenon for us. The laws of the cryptographic market are still poorly understood, and existing research results do little to help, because they can be erroneous. So far, one thing is clear - Bitcoin is growing because the demand for it is increasing. Now it is an excellent opportunity not only to save, but also to increase its capital, but how long it will last is unclear.

Analysts have to work hard to finally understand what Bitcoin is and how it will behave in the future. It may well be that it will take several more years, and only then it becomes clear what Bitcoin really is. So far, one can only guess about this; one cannot be sure. And, by the way, for the same reason it is difficult to predict the behavior of the cue ball in the market - there is simply no precedent, and there is nothing to compare with.

Source: https://habr.com/ru/post/407697/

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