"Bitcoin Is Bigger Than Jesus"
That's the top.
That's the most outrageous claim you can make about Bitcoin without getting a lot of resistance. Everything up to that point is fine.
But that's quite a top, if you ask me.
Over the weekend, I decided to do a little experiment on Twitter. The plan was to make the most outrageously insane Bitcoin predictions and see the reactions. Tweets included:
Tweets like “Bitcoin is going to bring forth a new Utopia” and “the price of Bitcoin is going to infinity” were actually met with positive responses. People actually liked and retweeted those messages. But the line was crossed with the Jesus thing.
Now, before you get all upset, I'm not actually suggesting Bitcoin is bigger than Christianity. I had to create extreme messages in order to find the point of resistance. I did.
Twitter user @marketdream says, "It's not cool to say that," while user @LtningB4Thndr says, "That’s not cool Luke."
I contacted both of these guys to let them know this was only an experiment and that I wasn't really making that claim. But I want you to notice that more people actually liked the tweet than complained. So maybe "bigger than Jesus" isn't the top.
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What is the Top for Bitcoin?
If you're familiar at all with my perspective on Bitcoin, you know I believe it does in fact have some value. However, I also believe Bitcoin's value is overinflated at present.
This is the absolute most hated perspective.
The Bitcoin fanboys only want to hear the price is headed much, much higher. The haters only want to hear Bitcoin is completely worthless.
I'm right in the middle. I see Bitcoin as having some value, at the very least based on illicit activity. I mean, we can't argue that heroin has no value, even though it's illegal. And among Bitcoin's usefulness is the ability to transfer money anonymously.
Everyone hates this middle-of-the-road approach — which actually gives me a lot of confidence that I'm spot on.
But this is the way markets work. It's just one big high/low game.
We know the absolute potential bottom for Bitcoin is $0. But we don't know the top... yet. And finding that top creates market bubbles.
When most people hear that a market is in a “bubble,” they assume it means a crash is imminent. This is not always the case.
A market bubble is simply the result of natural pricing behavior. It can be identified in an expansive phase. It's the market's high/low game to determine true value.
Consider for a moment how most houses are sold...
Sellers start with an asking price. Potential buyers are almost always going to bargain.
So, if you wanted to walk away from a home sale with $500,000, at what price would you start your listing?
Would you start at $500K? Or would you start at $650,000 to give yourself bargaining room? And, heck, maybe you can even get a little more than you really wanted, right?
The same thing happens in public markets. Sellers ask for a high price. Buyers ask for a low price. An agreed-upon value is found in the middle.
The Bitcoin market is no different. And it's currently playing that high/low game looking for the top to determine real value. And, yeah, that means it's in a bubble.
Back in October, the price of Bitcoin was just over $5,000. I wrote in our sister publication Wealth Daily:
The Bitcoin bubble is still clearly in an expansive phase. The price of Bitcoin cracked an all-time high yesterday of nearly $5,300. And it's still aiming higher.
In fact, I think the price of Bitcoin will be $7,000–$8,000 by this time next week.
And from there I don't see any reason why speculative mania couldn't drive the price of Bitcoin to over $20,000.
So far, I've been right. OK, I've been very close. The price of Bitcoin reached a high of almost $19,900 this weekend.
How much more are Bitcoin owners willing to claim the crypto is worth?
Well, the resistance lays somewhere between infinity and it being a supernatural product. That's one helluva claim.
Of course, it's really impossible to say whether or not people actually believe the things they say on Twitter. I mean, I clearly just wrote a bunch of stuff I don't believe either as an experiment.
But I want you to consider just how far the Bitcoin fanboys are willing to accept outrageous claims. The price of Bitcoin is going infinity? That's not even within the realm of possibility.
Truth is, the Bitcoin fanboys are BS-ing you. There's no way a person in their right mind can really believe Bitcoin is going to infinity.
So far, they've been quite successful in creating a bunch of hype. How much longer will that last?
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bubble and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
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