There can be no question that Bitcoin has posted impressive gains in recent months. As of mid-December 2017, the world’s most well-known cryptocurrency broke through the $17,700 price point, up from just $4,751 at the end of August 2017. As of mid-June 2018, Bitcoin’s price point is at $6,718. Despite the large profits that the digital currency’s investors have been able to generate during that period of explosive growth, there are many who believe that Bitcoin could collapse just as quickly as it has grown.
Why Will the Crypto Bubble Burst?
The strongest reason to believe that the Bitcoin bubble will burst in due time is the fact that, despite its soaring value, Bitcoin has very little actual usefulness as a currency. Present estimates hold that only about 10,000 companies in the world actually accept Bitcoin as a means of payment. Owing to this fact, the explosive growth of its value has virtually no correlation to real-world purchasing power.
Most of the current value of Bitcoin is thanks to an enthusiastic rush of investors looking to get in on the growth. Coinbase, a major cryptocurrency exchange, recently reported adding as many as 300,000 new accounts in a single week. With so many investors flooding in to buy, the value of Bitcoin has been artificially inflated, producing a textbook example of a bubble ready to burst.
Get into Tangible Assets
By now, you almost certainly see the most obvious dangers of Cryptocurrency. Unfortunately, the effects of a Bitcoin bubble burst are unlikely to be confined to the seemingly isolated cryptocurrency market. Stocks of companies that do accept Bitcoin have seen their share of otherwise unwarranted growth as the digital currency has skyrocketed in price. Shares of online retailer Overstock, for instance, nearly tripled in value between July 2017 and November 2017. Some market experts even believe that a Bitcoin burst could trigger a more general market decline, affecting securities across the board.
With so much uncertainty in finance at the moment, tangible assets offer the same permanent value proposition that they always have during periods of volatility. Real estate and precious metals, the two most major classes of tangible assets, have more than proven their ability to weather bubbles, recessions and even depressions in the past. Gold, in particular, has shown itself to be a reliable safe haven investment for investors who want to limit their risk exposure when markets show signs of strain. For investors who are skeptical of Bitcoin and a stock market that could prove to be more volatile following a cryptocurrency bubble burst, tangible assets present a relatively safe option that will hold value through hard times.