Why The Bitcoin Bubble Is Different From All Other Bubbles

Will the bubble ever burst?

Benzinga's PreMarket Prep hosted a special bitcoin episode Tuesday. Jim Angel, professor at Georgetown University School of Business joined the show to discuss the speculative bubble that has formed in the bitcoin market.

This Time It’s Different

According to Angel, the bitcoin bubble is unique when compared to all other bubbles in the history of financial markets.

“What makes this one different is very few catalysts for popping the bubble,” Angel said. “During the dot com bubble, when a dot com baby came out with a bad earnings report, people realized the business model is broken, and the market responded swiftly and harshly.”

Angel said bitcoin bulls see the cryptocurrency as a store of value and a digital replacement or gold in the event of a collapse of human civilization, and there’s no way to disprove that thesis unless the global economy actually collapses.

Bubble Bursting

Angel believes the bitcoin bubble won't last until the collapse of civilization. Instead, he says the biggest threat to the bubble won't be major news headlines, or new projections from Wall Street analysts. Instead, he said the bitcoin bubble will likely not go out with a bang, but rather with a whimper.

“My prediction is that eventually boredom is what’s going to cause it to deflate,” Angel said. “Once the people who are rushing in out of fear of missing out, the FOMO, see, ‘Wow, ok I got this thing, now what can I do with it?’ If the price goes nowhere, the speculators are going to say, ‘I’m bored, I’m going to sell it and take whatever profits or losses I have and move on.’ Eventually, I think it will kind of wither away.”

Angel’s prediction of a long, slow drop is dangerous for both bitcoin longs, who see prices headed higher, and bitcoin shorts, many of whom are paying high fees to bet against the cryptocurrency. As of Tuesday afternoon, the Bitcoin Investment Trust GBTC was up 2,460 percent year-to-date.

Want to hear more from the PreMarket Prep Bitcoin Special? Click the play button below to purchase the full 90-minute show. A preview is also available above the play button.

PreMarket Prep is a daily trading ideas show hosted by former floor trader Joel Elconin and prop trader Dennis Dick. You can listen to the show live and participate in our chatroom every day from 8-9 a.m. ET here. The show is also available on YouTube Live. The podcast is available on iTunes, Soundcloud, and Stitcher.

Related Links:

A Guide To Who Loves And Hates Cryptocurrency

Does Bitcoin Actually Hold Any Value At All?