Based on the arguments of a team of Bank of America Merrill Lynch (BAML) researchers, they are with the opinion that Bitcoin is probably one of the “greatest asset price bubbles in history.”
In an announcement made last Sunday, the team which was spearheaded by chief investment strategist Michael Hartnett explained the present state of the market, saying that the market which has already gone through a 60 percent recovery in 2017, is indicative of a bubble that is about to burst.
The team also went as far as providing a chart relating Bitcoin with well known historic financial happenings such as the Mississippi Company and South Sea Company in the 18th century, the U.S.S stock market in 1929 and the Dutch tulip bubble in 1637.
As explained in the published chart, a Bitcoin bubble will have the largest asset price increase by a substantial margin. At its highest level, Bitcoin’s price was close to 60 times what it was three years earlier. In comparison, the Dutch tulip prices increases was only about 40 times.
Also indicated in the chart are the consequences of the well-known historical bubble including their run, highlighting that once these assets collapse, they stay at the new lower levels.
However, this trend is yet to be seen for Bitcoin. Bitcoin’s recent bubble is not history and it’s not also the assets greatest bubble. Back in 2010 and 2011, the price of Bitcoin increased 120-fold which was around $11 before it collapsed. In 2013 and 2014, the prices increased to levels that were steeper than the current bull market.
This goes to show that the link made between the 2017 bubble and the previous ones was inaccurate.