A bubble is an artificial over-valuation of stock prices that will eventually lead to sudden downward correction. A bubble bursts when a rapid increase is followed by an abrupt crash, caused by a decrease in demand and increase in supply of the product. Speculation exists as to whether the Bitcoin is a bubble itself, ready to burst. While some people assure that the Bitcoin is far from even resembling something like a financial bubble, others argue that the Bitcoin bubble has already burst and a long time ago at that. A third opinion exists where the Bitcoin is indeed a bubble, but one that hasn’t burst yet. It will do so as soon as Bitcoins stop being useful to the general population. To give a solid, concrete answer as to when that supposed burst will happen is impossible. Even though there have been a lot of similar situations throughout history (the financial crisis of 2008, the Mississippi bubble burst, etc.), the Bitcoin is a bit different from all of them. The decentralized nature of the cryptocurrency has its drawbacks, but is probably also its biggest strength.
Bitcoin's price fluctuates as the market seeks price discovery among the hundreds of thousands of market participants. Changes in sentiment may be caused by for example a loss of confidence in Bitcoin, increased press coverage stimulating speculative demand, fear of uncertainty, and old-fashioned irrational exuberance and greed.
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