Alex Morris

Strategist Tom Lee Still Optimistic About Bitcoin While Wall Street Slowly Embraces Crypto

A famed Wall Street bull Tom Lee is being confident that Bitcoin’s bearish trends won’t last long following the announcement about a new digital asset firm opening
Strategist Tom Lee Still Optimistic About Bitcoin While Wall Street Slowly Embraces Crypto

Bitcoin (BTC) might have experienced a couple of bearish downticks during the last few days, but Wall Street still remains keen on the king of crypto. Fundstrat’s Tom Lee predicts Bitcoin’s big return while Intercontinental Exchange (ICE) has recently made an announcement about launching a new digital assets trading platform.

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Bitcoin’s comeback is upon us

While many fear that Bitcoin may take a nosedive below a physiologically important mark of $6,000, Tom Lee is certain that this cryptocurrency is not ‘broken.’

The famous Bitcoin bull points to the fact that BTC is gradually regaining its dominance, which is a good indicator that the current price is here to stay. However, the question remains whether Bitcoin price will be able to catch up with the rapidly developing crypto market.

Wall Street cozies up to crypto

Last week, the crypto community was also uplifted by the news about a new ICE-based company Bakkt, which is going to act as an open platform for trading and storing cryptocurrencies.

By forming partnerships with such heavyweights as Microsoft and Starbucks, Bakkt is poised to bring crypto adoption to a whole new level.

Furthermore, it would help to stabilize its price and boost investors’ confidence. Now, it is time for SEC to come up with federal regulations to make sure that traders are protected.

The industry is gaining legitimacy

One of the reasons behind Wall Street’s interest in Bitcoin might be its enhanced reputation. According to a recent US DEA report, only 10 percent of BTC transactions are somehow connected to illicit activities. Overall, the industry had experienced a huge 80 percent decrease in crime rates over the last five years.

However, in lieu of infamous ‘dark web’ criminals like Dread Pirate Roberts, there is a growing number of run-of-the-mill scammers who speculate on Bitcoin price.

Moreover, CryptoComes has recently reported how fraudsters lure investors in so-called ‘pump-and-dump’ schemes, which are considered illegal in any regulated market.

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Joseph Young

SEC May Start Going After Crypto ICO Promoters Who Failed to Disclose Compensation

Following High Profile Mayweather and DJ Khaled Case, SEC Could go After More Crypto ICO Promoters
SEC May Start Going After Crypto ICO Promoters Who Failed to Disclose Compensation

The U.S. Securities and Exchange Commission (SEC) recently reached a settlement with professional boxer Floyd Mayweather and music producer DJ Khaled for promoting crypto initial coin offering (ICO) projects.

Both Mayweather and DJ Khaled agreed to pay the amount they received as compensation to promote ICOs and a penalty on top of it along with prejudgment interest.

According to the SEC, Mayweather agreed to pay a fine of $614,775, while DJ Khaled agreed to pay $152,725. Mayweather was paid $300,000 for promoting three ICOs and DJ Khaled was paid $100,000 by Centra to promote its ICO, which was cracked down by the SEC as securities fraud.

Enforcement Division Co-Director Steven Peikin said:

"Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements. Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds."

SEC’s Phase Two

Earlier this week, Reuters reported that ICO projects have been purchasing reviews and articles to promote token sales without disclosing them as sponsored reviews or articles.

ICOs have been paying YouTube celebrities, publications, writers, analysts, and ICO review sites anywhere from $1,000 to $10,000 for a mention.

According to Reuters, ICO promoters that have failed to disclose the exact amount they received to encourage investors to purchase a security fall under securities fraud.

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In July 2017, the SEC wrote in a report:

“Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.”

At the time, the commission clearly stated that the failure to disclose compensation is a violation of federal securities laws and can be considered as fraud.

However, not all ICOs are securities, as seen in the recent U.S. federal court ruling wherein the court ruled in favor of an ICO project against the SEC.

“The SEC brought an enforcement action against a company called Blockvest, alleging that Blockvest’s ICO was a securities offering. Ultimately, the Court found that SEC couldn’t prove the ICO satisfied the Howey test and so SEC lost the motion. Honestly, the loss doesn’t really matter much. As the plaintiff, you’ve got to be aggressive and try for one,” Marco Santori, the president and chief legal officer at Blockchain, said.

Promoting an ICO without disclosing compensation to the viewers can only violate U.S. securities laws if the ICO is considered a security. If the team behind the ICO decides to challenge the SEC and takes it to the federal court, there exists a possibility that the federal court rejects the SEC’s claim and declare the asset as a non-security.

The SEC, as an enforcement agency, does not make regulations; it merely utilizes existing regulatory frameworks and evaluates whether assets fall under certain categories.

Many Might be Targeted

The Reuters investigation revealed at least three YouTube celebrities and writers on major publications that have received compensation from ICO projects to promote token sales.

Throughout the months to come, the SEC could continue to crackdown on well-known public figures and organizations, as seen in the case of Floyd Mayweather and DJ Khaled, to establish a precedent in the industry.

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Alexander Goborov

Interest in Cryptocurrency Leaders Drops: New Players Likely on the Rise

Major cryptocurrencies are seemingly less fashionable on Google and Telegram, but that might just indicate a hidden rise in popularity for the other crypto players
Interest in Cryptocurrency Leaders Drops: New Players Likely on the Rise

Many crypto proponents argue that cryptocurrency is here to stay. On the contrary, some critics claim that cryptocurrency is a has-been of the financial world and on the way out. Whichever side of the fence you happen to be sitting on, there is no doubt that since the December 2017 crypto bubble, during which Bitcoin reached the record high of almost $20 000 USD, all major cryptocurrencies, Bitcoin included, have been dwindling in value.

image

Concurrently, as the graph above illustrates, the crypto market’s indisputable leader both by market cap and unit price (standing at almost 6500 USD), Bitcoin, has seen a dramatic decline in its searches on Google. Having come down sharply in the winter of this year after last year’s bubble, the search figure continued to fall relative to the previous months, as measured by Google Trends, gradually declining even further, first in the summer and subsequently in the autumn. At present, Bitcoin’s popularity wave appears to have reached its trough.

image

As the second graph shows, this bearish trend is also present in this year’s cryptocurrency mentions on Telegram. Here again, the four leaders by market cap, Bitcoin (~112 billion USD), Ethereum (~21 billion USD), Ripple (~18 billion USD), and EOS (~5 billion USD) have all been but plummeting in their talkability power. Bitcoin fell from 20000 mentions in January to 3000 mentions right now, while the other three all fell from 1000-5000 mentions in January to under 1000 in October.

Nevertheless, this apparently negative trajectory might not necessarily be indicative of a general disinterest in cryptocurrency, but rather of a move away from the unipolar dominance of the major crypto players. In other words, we may be experiencing a period of rapid expansion of the crypto market, in which complexification is not a vertical one, but rather a horizontal one, i.e. an across the board cryptocurrency diversification.

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In terms of this year’s Telegram mentions, there could be yet another, less obvious reason for this decline. Cryptocurrency aside, it would not be implausible to suppose that Telegram itself has become less popular this year, since the end of the 2017 crypto bubble coincided with the Russian government's crackdown on Telegram. Accordingly, there may simply be fewer interactions and mentions on Telegram of any kind, including those that pertain to the crypto world. Be that as it may, it still wouldn’t explain Bitcoin’s decreasing search statistic on Google, which makes the first explanation we offer here more parsimonious.

Whatever the reason for the market leaders’ forced retreat, it is clear that, speaking overall, this crypto year has been on the wane so far. We may yet see some changes brought about by the appearance of the merry-faced Santa in the upcoming holiday season. What is self-evident regardless is that more and more newly established crypto players are joining the race every day with their own agendas and cryptocurrencies, which may well give the public less time to pay heed exclusively to the leaders, as was the case until somewhat recently.

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Wikicoin George Shnurenko

10 Bitcoin Millionaires: People Who Became Rich From Cryptocurrency

📚 Wikicoin
Becoming a millionaire overnight is possible with the right crypto investment.
10 Bitcoin Millionaires: People Who Became Rich From Cryptocurrency

These stories of 10 Bitcoin millionaires prove that there’s nothing impossible, and a smart investment made once can make you go from zero to hero. Let’s find out how people managed to gather their Bitcoin wealth.

Together with revolutionizing the world economy, Bitcoin has irreversibly changed lives of many people– mostly the ones who believed and bet on it. Stories of some of them prove that it’s possible to become a Bitcoin millionaire overnight– such wonders happened. It’s time to read about ten people who have managed to wake up as Bitcoin millionaires.

The list of Bitcoin millionaires 2017

In this Bitcoin millionaires list, we compare the revenue obtained from trading and investing in the currency.

Gavin Andresen

$2 mln

Yufi Guo

$5 mln

Winklevoss Twins

$ 11 mln

Tony Gallippi

$ 20 mln

Jered Kenna

$ 30 mln

Dave Carlson

$ 35 mln

Charlie Shrem

$ 45 mln

Roger Ver

$ 52 mln

Ross Ulbricht

$ 100 mln

Satoshi Nakamoto

$ 1.1 bln

Jered Kenna

This young millionaire started his way as a trader by buying the coins for $0.20 each. A few years later, he sold the coins for $258 each. The man confesses he lost nearly $200,000 when he formatted a flash drive. Therefore, the millionaire could actually earn way more than his $30 mln, hadn't he made a few mistakes. Anyway, the revenue he's received impresses– not so many traders manage to make millions.

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Winklevoss brothers

Winklevoss twins were among the first to join the Bitcoin club even when the cryptocurrency wasn't popular at all. They started the career path in Facebook and paid attention to the cryptocurrency at the earliest stage of development. Thanks to wise investment, they have managed to earn $11 mln.

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Charlie Shrem

Being among the youngest millionaires from Bitcoin, Charlie Shrem actually started his way as a co-owner of Evr, a well known gastropub in Manhattan. By the way, this place was among the first to accept Bitcoin payments. Initially, Shrem purchased Bitcoins for $3-4. Eventually, he purchased a few thousand more when it reached $20. Later on, he organized Bitinstant- a physical store where people could buy Bitcoins. At the moment, Bitinstant serves as an exchange platform.

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Gavin Andresen

A lot of rumor goes behind the back of this millionaire: Bitcoin creator, Satoshi Nakamoto, has chosen him to be a “successor” to maintain the code of the technology. Some say that Andresen is the mysterious Nakamoto himself– the man denies such claims. Meanwhile, he continues doing his job making Bitcoin easier in maintenance. He has been paid by the Bitcoin Foundation for the help he provided and cashed out a few times. Of course, the payments were accepted in Bitcoins.

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Roger Ver

Roger Ver also invested in Bitistant and together with purchasing Bitcoin gave the coin away. Why? To make people learn about this technology: Roger views it as a reliable way to store valuable assets and aspires to make it wipe out the fiat currencies. Therefore, Ver was the pioneer of startup investments. Being a successful businessman before Bitcoin’s popularity wave, he has managed to augment his riches considerably and now donates his riches to charity projects.

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Yifu Guo

This Bitcoin kid millionaire started his way in Bitcoin by mining it when he was a student living in New York. A bit later, he created Avalon - the company that specializes in building of mining hardware. The main goal of this initiative is to promote the development of Bitcoin and maintain network availability down the road.

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Tony Gallippi

Tony has long ago become a millionaire: Bitcoin was just another initiative that helped him to multiply his income. Gallippi has a rich experience in financial sphere- he's founded a company that processes payments. In fact, Gallippi’s company focuses on:

  • retail payments

  • real estate

  • bonds and stocks.

His current enterprise, BitPay processes payments worth $1 mln daily and is among the first enterprises to conclude Bitcoin-related agreements with retail stores.

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Dave Carlson

Dave Carlson is a self-made millionaire: he invested into equipment and mined hard. After earning enough money he has found MegaBigPower that allowed mining at an industrial scale – the facilities are placed in his basement. Today, he possesses over 2,000 square feet of space where mining hardware is located and was reported to earn at least $8 per month in 2016.

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Ross Ulbricht

This Bitcoin millionaire story is pretty sad. Despite its digital nature, Bitcoin is a two-sided coin, and the anonymous character of transactions makes it impossible to track the exchange of the currency. That led to the appearance of dark net and illegal operations done via Net. Silk Road was a black market established by someone called ‘Dread Pirate Roberts’. He’s managed to earn millions even before Bitcoin cost a thousand dollars. In 2013, the FBI finally figured out who the man was – Ross Ulbricht. The man got a life sentence, and his black market was shut down. Therefore, almost 150,000 withdrawn Bitcoins now is at FBI’s disposal.

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Satoshi Nakamoto

Our list wouldn’t be full without Satoshi Nakamoto – the mysterious personality (or a group of programmers) who have created Bitcoin. Here are some facts about him:

  • A few people were suspected to be Satoshi Nakamoto, including a famous mathematician. However, nobody knows for sure who stands behind the cryptocurrency.

  • All attempts to track down the personality of Satoshi Nakamoto failed. Today, only a few email chats with other Bitcoin developers exist.

  • Since there are about 1.1 mln Bitcoins existing, Nakamoto’s wealth is worth over $1.1 bln today.

Who is Satoshi Nakamoto?

Want to be the next to say “Bitcoin made me a millionaire”? There’s still every opportunity for it even despite the end of the era when a coin was worth 20 cents. Everything is possible, if you understand the rules of the game, and can predict the fluctuations of currency. If you need some motivation and inspiration, we hope the stories of these people will encourage you.

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Coins Guide George Shnurenko

What is Metal (MTL) - Simple Explanation for Beginners

🎓 Coins Guide
Metal is relatively new cryptocurrency used within the Metal Pay ecosystem to conduct the payments.
What is Metal (MTL) - Simple Explanation for Beginners

Metal is relatively new cryptocurrency used within the Metal Pay ecosystem to conduct the payments. It is built on the Ethereum blockchain. These tokens are usually offered as a reward when a user receives, spends, or sends his money buying cryptocurrency. Every transaction is accompanied with 5% back of the sum of any currency but converted into MTL tokens. The earned capital can be accumulated on the account or used for trading with other cryptocurrencies. They can be easily transferred into cash also, but keeping them within the Metal the user continues getting the rewards.

 

What should you know about Metal Pay?

Metal Pay is a rather simple application developed for conduction of payments. Here you are free to transfer your assets to any person you want. Among the receivers there are merchants or just your friends. It can also be applied for the gadgets working on the iOS. The mobile version is very easy to set up. The process will not take long. All that you need is to have a mobile phone with iOS. First, you should enter it setting your password. Then you are expected to link a bank account and set a profile picture. Now just get popping!$MTL #blockchain #fintech.

Why should you prefer this app of the list of the analogues? Because it has some particular features, which make the difference. Of course, it is cool to be awarded. You use the system and do not pay for the transactions, but get the money on your account encouraging you to continue for your benefit. You can invite your friends to join and take advantages of Metal Pay. Thus you’ll increase the number of transactions getting even more coins, which as we have already mentioned are allowed to be converted into the cash.

This is the real income. And there are no special requirements. You can use the Metal Pay app for getting cash. Once again, this is a stunning chance to earn sending your friends the cash without any fees. By the way, the receiver gets 5% back also. Whatever you do with MTL, you gain profit because even when you hold the amount of Metal on your account, you get rewards! So, there are three things you can do: to cash out, to trade or to hold.

That is a competitive position! If you need to send money, why should you miss the chance to get cryptocurrency for free? It is available to any person. Do you want to pay your rent through Metal Pay? Use it and earn money! In this way the ecosystem attracts customers. You get to see firsthand! Here there are demos showing how the app acts.

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PoPP (Proof of Processed Payment)

How does it happen? The reward is possible due to Proof of Processed Payment (PoPP in short). This process resembles distributing coins to miners but the receivers are people using Metal Payment. So, as soon as you confirm your identity with system, you start getting the rewards in MTL due to PoPP if the above conditions are met meaning that you are involved in transactions within the app.

You should understand that there is a cap in MTL rewards per month making $1000 for individuals and $5000 for merchants. Again every user is under control preventing fraud. If a person sends the same amount back and forth, he will be banned and refused in getting the MTL rewards. Thus, the Proof of Processed Payment is not as simple as it seems. The transaction should be confirmed as legitimate. It is impossible to game the system, the PoPP prevents from doing this. And the anti-fraud measures will be even enhanced in due course.

Why is the reward level equal to 5%? The purpose is to exceed the typical credit card rewards. There is another question: can the rewards be over one day? It depends on popularity of MTL. If the Metal app becomes very popular and its tokens are distributed, it will be a sign that the success is achieved. The Metal will become the medium for exchange.

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🎓 Trading Guide Urvashi Verma

Bitcoin Price Volatility Explained

Trading Guide
Blockchain network effects cause Bitcoin price volatility
Bitcoin Price Volatility Explained

The network effect

In recent months a host of factors such as regulatory uncertainties, lack of oversight, custodial issues and bad press have been cited as causes of Bitcoin’s precipitous downfall.

While these factors do impact the price fluctuations of the cryptocurrency, economists say Bitcoin’s higher volatility compared to fiat currencies or stocks is caused by a characteristic known as the “network effect.”

The network effect is central to understanding Bitcoin’s valuation because it and other digital currencies run on a Blockchain ledger, which essentially a network.

The value of Bitcoin and other cryptocurrencies is based on Metcalfe’s law, which states that the measure of a network’s value is proportional to the square of the number of people who use it.

This basic equation is the foundation for Bitcoin valuation tools.  

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Metcalfe’s law

Expert analysts like Tom Lee and others use this fundamental law to determine Bitcoin’s future price. Tom Lee told Business Insider in an interview:

“94 percent of Bitcoin movements over the past four years is explained by Metcalfe’s equation.”  

Lee likened the exponential growth of Bitcoin to other networks like Facebook, Alibaba and Google, which have also increased exponentially in line with Metcalfe’s equation.

Essentially, what this means is that a network’s value grows exponentially, not linearly like other assets such as securities and commodities, says Navroop Sahdev, economist and blockchain expert:

“Networks gain and lose strength exponentially and a few actors leaving or joining the network can have a massive  impact.”

Sahdev, a fellow at MIT, says it is this characteristic that makes digital currencies like Bitcoin so unstable.  

In the example of Mt. Gox ‘s recent sell-off of 8,200 Bitcoin, which sent the currency reeling downward by 30 percent, the impact was much more significant than it would have been if the same number of shares were sold in a company.

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Why traditional economics fail

Part of the reason we don’t hear about how digital currencies are valued is that traditional economics fail to predict their behavior, says Sahdev.

In a cryptocurrency network, nodes process transactions, but the strength of the system is hard to evaluate because the “effect” of two or multiple transactions interacting with one another is not a characteristic of the transactions or nodes themselves. Instead, they become a property of the entire network. Sahdev clarifies:

“One plus one is not two. The link between the nodes is not the property of any one node. The system is more than the sum of its parts.”

Even the best models cannot predict the impact of “interaction effect” because they can only be determined after it takes place. While it’s tough to predict what will happen, it’s possible to identify trends, Sahdev says.

Small sparks make big movements

Research conducted by Spencer Wheatley and his colleagues at ETH Zurich in Switzerland found that when markets become overvalued, even a small event or incident can result in a significant correction.

Wheatley and Co looked at four occasions when Bitcoin price had drastically swung and found Bitcoin price drops occurred when the price was nearly four times higher than what it should be using Metcalfe’s law.   

Spencer Wheatley at ETH Zurich says:

“Our Metcalfe-based analysis indicates current support levels for the Bitcoin market in the range of $22 to $44 bln USD, at least four times less than the current level.”

As Bitcoin price becomes overvalued, any small event can induce a market correction.

So, it’s possible, that the sell-off 8,200 BTC by Mt. Gox, which amounts to less than the total number Bitcoin traded within a 10-minute time frame, was able to cause a massive price drop.

Wheatley uses the analogy of a forest fire to describe Bitcoin’s network effect.  When all the branches are very dry, even the smallest spark can create a raging forest fire. The events resulting in the bust of a bubble are often insignificant but have a huge impact.

Impact of Bitcoin futures

A report published by the San Francisco Federal Reserve found that there was a correlation between Bitcoin price drops and futures contracts, which placed downward pricing pressure on Bitcoin and other altcoins. With falling prices, pessimists started to make money on their bets, fueling further short selling and exacerbating the price drop, the report says.

Given that Bitcoin is susceptible to a small number of members exiting or entering the network, the adoption of futures contracts could have had a more significant impact on the cryptocurrency when compared with other commodities, especially if it was already overvalued.

Bitcoin’s bubble-like behavior

Joost van der Burgt of the San Francisco Reserve explains that Bitcoin price developments mimic Hyman Minsky’s financial instability hypothesis which explained the bubble in the global financial crisis of 2007.

Minsky’s model explains that there are five stages in a credit cycle: displacement, boom, euphoria, profit taking and panic.

The displacement phase occurs when investors get enamored by a new paradigm- in Bitcoin’s case, between 2009-2013 when the price came close to $1,000.

Next, the boom phase is characterized by prices rising slowly at first, but then gaining momentum as participants enter the market due to fear of missing out. Van der Burgt says this is what we started to see in 2015 when Bitcoin price rose to $300 and then to $1,000.

Bitcoin is now in the third, euphoric phase, which emerged in the second half of 2017 when the price skyrocketed past the $2,500 mark, all the way to nearly $20,000 in December 2017.

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Euphoria phase

The euphoria phase is characterized by people extensively borrowing funds to finance their investments, much like the real estate market bubble in 2007.  Nearly 18 percent of active Bitcoin investors have financed their investments by credit card, and 22 percent of this group indicated that they have not yet paid off their credit card balance, according to the report.  

Further, in 2017 several Bitcoin exchanges started to offer margin trading. Japan-based BitFlyer indicated in December that some investors leverage their cash deposits up to 15 times to finance their Bitcoin investments.

If Bitcoin is a bubble, then the next phase is profit-taking, in which investors will cash out before the bubble bursts.

Van der Burgt says we might have already entered this phase with the recent drop that cut Bitcoin price by more than 60 percent early this year.

Future of Bitcoin remains uncertain

While Van der Burgt says that Bitcoin is likely to be overpriced, he also believes that it is different from anything we have seen before. It’s possible that a decade from now Bitcoin’s market capitalization will be sky-high as it attains the status of a new global currency.

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