12 Things That Suggest BTC is a Speculative Bubble
Updated
"We're so Early"
BTC bulls say we're so early and 100,000 people agree. Which isn't how things usually go when you're "Early".
Moving Goalposts on Value Proposition
The original value proposition of BTC was it would be a currency with various benefits over fiat currencies. It's never happened and as it's become more obvious it's not happening it's just shifted to a "Store of value".
"Shoeshine Boy" Participants
BTC is becoming increasingly flooded with people with little to no market experience who think they can be certain of the future. Interestingly enough, on an anecdotal level I see most people of the people who I know have had great success long BTC either making full exits of their positions or heavily hedging them with puts on related stocks.
The indictors that are meant to give us clues as to if there are big buyers or sellers in the market strong hint towards big sellers and small buyers.
Excessive Attitudes to Risk
People's attitude toward risk taking in BTC is toxic. It's really the worst I've ever seen in an asset. I'm tempted to say it's the worst attitudes to risk can ever get but I know if it went higher it'd just get worse. It feels very hard to believe people are going to get away with it. When people forget the market is the master and not the servant, bad things happen.
Rise in Problem Gambling
There's a lot of documentation in the journals of health, addiction and psychology pertaining to problem gambling and crypto.
A perception BTC Isn't Gambling/Risky
Many people believe BTC is a safe bet. Even although a lot of these people also make the "Store of value" argument and do not attempt to support any actual objective value for BTC. Which mean they're essentially promoting the "Greater fool" bull thesis. AKA, ponzi.
The "Us and Them".
Something I've noticed we get a lot into major highs is the "Us and them" dynamic. Bulls think if you're not an "Us", you're a "Them" and "They" are all out to trick you into selling your endlessly valuable assets. It's all a conspiracy. No one can just have a straight up bear thesis. And if they do, don't listen to them because they're just negative!
Thinking is a Waste of Energy
BTC rarely engage in debate and often outright encourage people not to think too much about the claims made. "Trust me, bro". You notice this when you try to debate with them. There are a handful of popular talking points. It's like everyone learned a script. When you knock them off that script the convo just ends.
Or the name calling starts.
Absurd Claims of Certainty
There are people out there who will swear, without a hint of irony, that they know the future of BTC. That everything is predictable. In almost every case of this, I find they've never actually predicted any of the down moves in BTC. Ever. But they feel very sure they'll not get caught out again...
Static Thesis Despite New Dynamics
"I'm long BTC because the FED rates are on the floor and I think it's an inflation hedge".
Used to be a good case to be long. But then we went into the fastest cycle of rate hikes in history and people just kept repeating the same thing. New conditions, same story. No updating an opinion based on updates on how things are. If this was the bull thesis, then the exit signal for it fired.
FOMOOOOOOOOOOOOOOOO!
BTC has objectively had diminishing returns over the last 7 yrs. If you bought BTC at the highs any time in the last 7 years you'd have made 300% for 70% drawdown. Risk adjusted, this isn't that impressive at all. There are many ways you can get the same results faster if you are happy to sustain those sorts of drawdowns.
BUT YOU HAVE TO GET IN NOW OR YOU'LL MISS OUT BIGGGGGGGGGGGG!
The Comments Sections
And the biggest tell of a speculative bubble, is the comments sections on any major bear analysis of BTC.
If there's a huge popping of a bubble in BTC, when people look through these comments in 5 or so years it will be obvious people were risk junkies - far too aggressive. Far too confident.
BTC bulls say we're so early and 100,000 people agree. Which isn't how things usually go when you're "Early".
Moving Goalposts on Value Proposition
The original value proposition of BTC was it would be a currency with various benefits over fiat currencies. It's never happened and as it's become more obvious it's not happening it's just shifted to a "Store of value".
"Shoeshine Boy" Participants
BTC is becoming increasingly flooded with people with little to no market experience who think they can be certain of the future. Interestingly enough, on an anecdotal level I see most people of the people who I know have had great success long BTC either making full exits of their positions or heavily hedging them with puts on related stocks.
The indictors that are meant to give us clues as to if there are big buyers or sellers in the market strong hint towards big sellers and small buyers.
Excessive Attitudes to Risk
People's attitude toward risk taking in BTC is toxic. It's really the worst I've ever seen in an asset. I'm tempted to say it's the worst attitudes to risk can ever get but I know if it went higher it'd just get worse. It feels very hard to believe people are going to get away with it. When people forget the market is the master and not the servant, bad things happen.
Rise in Problem Gambling
There's a lot of documentation in the journals of health, addiction and psychology pertaining to problem gambling and crypto.
A perception BTC Isn't Gambling/Risky
Many people believe BTC is a safe bet. Even although a lot of these people also make the "Store of value" argument and do not attempt to support any actual objective value for BTC. Which mean they're essentially promoting the "Greater fool" bull thesis. AKA, ponzi.
The "Us and Them".
Something I've noticed we get a lot into major highs is the "Us and them" dynamic. Bulls think if you're not an "Us", you're a "Them" and "They" are all out to trick you into selling your endlessly valuable assets. It's all a conspiracy. No one can just have a straight up bear thesis. And if they do, don't listen to them because they're just negative!
Thinking is a Waste of Energy
BTC rarely engage in debate and often outright encourage people not to think too much about the claims made. "Trust me, bro". You notice this when you try to debate with them. There are a handful of popular talking points. It's like everyone learned a script. When you knock them off that script the convo just ends.
Or the name calling starts.
Absurd Claims of Certainty
There are people out there who will swear, without a hint of irony, that they know the future of BTC. That everything is predictable. In almost every case of this, I find they've never actually predicted any of the down moves in BTC. Ever. But they feel very sure they'll not get caught out again...
Static Thesis Despite New Dynamics
"I'm long BTC because the FED rates are on the floor and I think it's an inflation hedge".
Used to be a good case to be long. But then we went into the fastest cycle of rate hikes in history and people just kept repeating the same thing. New conditions, same story. No updating an opinion based on updates on how things are. If this was the bull thesis, then the exit signal for it fired.
FOMOOOOOOOOOOOOOOOO!
BTC has objectively had diminishing returns over the last 7 yrs. If you bought BTC at the highs any time in the last 7 years you'd have made 300% for 70% drawdown. Risk adjusted, this isn't that impressive at all. There are many ways you can get the same results faster if you are happy to sustain those sorts of drawdowns.
BUT YOU HAVE TO GET IN NOW OR YOU'LL MISS OUT BIGGGGGGGGGGGG!
The Comments Sections
And the biggest tell of a speculative bubble, is the comments sections on any major bear analysis of BTC.
If there's a huge popping of a bubble in BTC, when people look through these comments in 5 or so years it will be obvious people were risk junkies - far too aggressive. Far too confident.
Note
Recent rally in BTC was the lowest volume rally it has ever had. There's a massive divergence in the OBV and price. THIS DIRECTLY CONTRADICTS THE IDEA OF BIG MONEY ENTERING. IT SUGGESTS BIG MONEY EXITING.
Big money entering is the fave narrative of BTC bulls right now and it's just not so.
Note
Volume of BTC longs has been crashing through the whole rally. Where are the signs of big investors FOMOing in?
That's the narrative but there's none of the fingerprints of it.
Note
Volume of BTC longs is at the level is was in 2018. The price is significantly higher and the long demand is significantly lower. Think about that.
Note
The bull case based on the ETF is flawed in so many ways. If you look at most ETFs you'll find they launch and crash. What an ETF tells us is there's enough widespread public attention to make it profitable to launch and market the ETF.
It does not really fit in too well with the "We're so early" narrative, does it?
Note
There's only one solid bullish narrative and it goes like this; "It's went up a lot in the past and because of that I think it might go up a lot in the future".
Isn't the worst case - but it's a statement from a speculative bubble.
All other cases are debunkable.
Note
If something can go down 20% over a couple days. Up 10% in one day. Be down 5% the next day and be fuck knows where in a few weeks/months from now - can we really call it a "Store of value"? Isn't this playing a bit fast and loose with the term?
Note
BTC bulls talk about ever increasing demand, but what if the demand for a "Store of value" that can drop 50% over night is soaked up? What if those up for this risk are already in?I mean, I think they'd have heard about it...
Note
What if these people are already in. HODLing.Meaning they're passive players not affecting the market any more.
Which would mean price would be dictated by those who want to sell.
Right?
That's how it works, right?
Note
I can't subscribe to the store of value thing and the fact people push this and currency make me feel more and more it's obviously a bubble. It makes no sense as a store of value.
"Are you still planning on buying that house you've been saving up for?"
"Nah. Don't have enough today. I'll check if it's back up tomorrow!"
Seriously...?
Note
Whenever I speak with BTC bulls giving a case other than momentum for the bull thesis I always end up thinking either me or them must have no idea how anything works. And I give them a chance to explain to me what it is I am wrong about.
But it always just ends up with name calling. It's not be calling people names...
Note
If the thrust of your counter argument is insults it's hard to take you seriously. Either you're using insults because you do not have a good case to make.
Or it's not worth listening to you because even with a good case to make you can't make it.
It totally discredits the point you're trying to make if you can't just make a point.
Note
And the other fave path is to assume you've never made any money with BTC and need a lecture on how to better embrace FOMO. As crazy a notion as it sounds, it's possible to feel different about something when it's priced at 70,000 than you felt about it when it was priced at 5,000.
Note
If you search via Google scholar for peer reviewed papers on "BTC bubble" it returns 25,400 results. These are not blog posts, they're peer reviewed scientific studies.
Most of them, determine BTC is highly susceptible to bubbles.
Note
A lot of BTC bulls are only comfortable talking about PRICE. They can tell you how much price went up. How much you missed out.
If you say it's a bubble and it goes higher they'll come back to tell you the price.
They only care about the price....
There's a couple of words that describe that.
"Speculative bubble".
Note
This isn't subjective. It's clear to see most people's reason for long BTC is "It's went up a lot and I think it might go up a lot more". No one really tries to debunk the bubble thesis.
And if price goes higher, these will still be facts. People saying it's a bubble and it's not being the high do not change the dynamics of how people are thinking and acting now. Does not change the CONSTANT pushing of FOMO.
It only changes the price.
And if you think you win the debate on if something is a bubble or not by what the price does in the immediate future rather than debunking the bubble thesis - this is just another sign of a bubble.
People only want to debate based on price. Not debunk the bubble.
Note
If you look at bear posts that have been popular and look at the comments to see the most upvoted comments, you'll see they're things like "Your smoking crack". Does this seem like the level of maturity of discussion we'd be looking for in those heralding in the utopian age of economics?
Note
There are people who will straight up try to tell you these days BTC was never meant to be a currency it was always to be a store of value. I read the original white paper. It was called: "Bitcoin: A Peer-to-Peer Electronic Cash System,"
It wasn't called, "HODL to Moon".
Note
So ... here's the Q. If it is only as "Store of value" then what is it if price stops going up and starts to consistently go down?
Wouldn't that make it essentially nothing?
And if it's essentially nothing if the price stops going up, how isn't that a bubble?
By defination?
Note
And let's not get into the unsolicited financial advice. It's more like financial demands with people telling you to buy BTC. They don't even bother with the magic letters "NFA" anymore.
Note
I know it's ironic most of the disagreement in the comments are personifications of the points raised in the post explaining signs of a bubble. You have to understand, they do not read the posts before disagreeing.
Note
A bubble is defined by most of the participants in the market only wanting to be long because they have a strong belief prices will be higher in the future. Do you think this would be a fitting description of most people in the comments?
"Cya at 100K" ...
That's not a debunk. It's not like the magic number for a bubble is 99K and then at 100K it's not.
That's just the bubble talking.
Note
My thesis there's a bubble isn't contingent on the high being it. I think it might be or we're close enough to make an effort to explain the case for it - but it's not contingent on it. I know a bubble can go higher or lower. I'm happy to trade either side.
The bubble thesis is based on an observation of how overly sure people are, and how little they use to back up their assertations.
Note
And it's obviously speculative. Most of the comments are just people pushing FOMO. Literally, that's all it is.
Note
If there was not a bubble, we could all have an interesting discussion as to the different aspects of whether or not there is a bubble. Having an open mind would not be taboo...
But it is a bubble. So all we can talk about is how much people have missed out on so far and how they'll be a fool if they miss out on the future endless gains.
Note
I've said it so many times but I'll say it again ... If your whole case is based on PRICE then you're supporting the hypothesis we're in a speculative bubble.
Where perceptions are driven solely by price!
Note
"it's like gold" ... Here's a difference. I have some gold and if speculation suddenly ceased to exist, I'd still like the gold.
I could sell a chunk of gold to someone with skills to make it prettier and they could sell it on at a higher value.
Gold is something without speculation. That's the value.
BTC, isn't.
Note
People keep telling me BTC has intrinsic value. Well, what's the number? How much is the intrinsic value? Explain the path for working it out. The idea of intrinsic value is you can say specifically what it is and the specific number of it.
"It has intrinsic value" is just a phrase. Explain what it is and how much it is.
Note
Walls of text from ChatGPT explaining all the reasons why BTC can be said to have intrinsic value does not disprove the bubble thesis. I never said there is no value, what I said is no one knows (Or even tries to explain) what it is.
BTC will go up because BTC goes up. That's pretty much what people end up saying.
If there's a real intrinsic value, there's an actual number.
A sum.
Means to determine what the value is.
Anyone have this?
Note
People seem to think "It has value" is a valid way to support the current valuation.A tin of beans "Has value". It's not $70,000.
And don't say "You can't liken BTC to a tin of beans!!!!!!"
That's not the point.
The point is no one is saying why the value is $70,000 and above instead of $7.
How is that determined?
Or are we just speculating?
Note
If the value is based on the demand and the demand is only based on the projections of higher prices in the future without any meaningful analysis to back up figures, this is speculation. "If more people believe prices will go higher, prices will go higher". This is what many statements people are making boils down to.
That really is the definition of bubble talk.
The other side of that is when people lose that faith, there'll be a speculative bust.
Note
Let's answer some of the better counter points: Electric = Value - The notion because it costs to create a BTC this gives it a value.
Not so. I'm paying electric to write this. Doesn't make it default valuable.
Let's look at it from another angle. Oil has value, right? Because all the things it does.
It costs electric to get oil out the ground, but this isn't the value of oil. The value of oil is higher than the costs of getting it out of the ground, which is why oil mining has been very sustainable through the years.
If everyone stopped using oil, it'd still cost electric to get it out the ground but this would not mean oil maintained value.
Note
Community = Value - The notion a strong community base creates value for BTC.What value does it create? Isn't the community main geared towards making profit from being long BTC?
If I were to setup a ponzi scheme, one of the primary goals would be to build a community. A community, especially one in it for the gains, does not create a default value. It just better enables the conditions for a bubble.
Note
The value is wealth preservation, like gold etc. People are not putting their money into crypto to maintain wealth. It's too volatile for that. People are putting their money into crypto with the aims of obtaining wealth.
Otherwise, we'd be having discussions about small allocations to high volatility markets as part of a diverse portfolio.
Not talking about the one and only true investment you can make to become wealthy or NGMI.
Note
The value will rise because the demand is self constricting. Not by default. Support and demand both work together. If I make 100 chocolate fireguards and no one buys them, destroying 90 of them doesn't make the 10 more valuable. It's demand that makes limited supply lead to increased prices.
What's the demand? Outside of having seen it go up and thinking it will go up more, what generates the demand?
If it's only the above, then it's 100% speculative.
Note
Points made based on why BTC was first created I think are mute because we've moved so far away from that. The original idea was born of the banking crisis in 2008 and the idea was somewhere safe funds could be stored in the event of failure of the traditional banking system.
The volatility risk in BTC now negates that. No point protecting from a bank run if you can just lose it in market moves anyway.
And BTC has never once served the function of being stable during times of panic. It's always moved alongside stocks.
So the most reasonable thing to assume at this point is a risk off macro markets event would be bad for BTC.
The original premise has been abandoned.
Few of you really want a stable store of value.
You want the moon things. The speculative replacement for the peer to peer money idea.
Note
For a large part of it, people are just expressing their distaste for governments and fractional reserve banking. I'm on the same page as you there with many of the things you say, but that does not change the fact BTC has become a speculative bubble.
One in which people are in it just to make money. It's a big bonus if it matches their ideology.
People think they can take down the big baddies and become ultra wealthy in the process. It's an alluring idea - but to me it reads just like GME and AMC.
Investments and crusades are different things.
Note
"Well isn't this or that a speculative bubble ..." Probably. If it's a risk on asset that's seen hyper growth through low interest rates and now people are just long it because they think it'll go up, might be a bubble.
We might be in a big risk on bubble. Created by accommodating CB policies. Crypto mania is one of the symptoms.
And if that's the case - then everything in history warns us rates around 5.5% are often a topping signal.
Note
Most of the comments fit under "Us and them". I'm not an "Us", so I must be a "Them". Either a shill or someone who's been short from the bottom and spends all my time shouting at the screen.
A baseless assumption. A bit cult-like, if I am honest.
Even if I have been long BTC in the past, I'm ex-communicated now.
Note
Oh and of course, "BlackRock are in so price will go up". Come on bro ... BlackRock are the major share holder in absolutely everything.
All they are doing is collecting fees and passing the market risk onto the client.
They're not holding the bag. They're just selling the service of letting you bet on the underlying.
Note
I was asked to stop updating this thread to comply with house rules. Here's a follow up post:
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