Bitcoin, Ethereum, Dogecoin -- Are They a Bubble?
Like beauty, cryptocurrency seems to be in the eye of beholder. Plenty of investors insist that digital coins are a bubble, but there are also millions of true believers in the new asset class who are "HODLing," or holding on for dear life.
Cryptocurrencies have surged since late last year amid widening institutional purchasing and increasing interest among retail investors, who have been stuck at home during the pandemic and looking to put their stimulus checks to good use. In many ways, the rallies of Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) resemble a bubble, as the assets have moved higher primarily on speculative fervor from investors who believe the coins will keep increasing in value. Essentially, many investors have been buying based on the greater fool theory -- meaning the hope that another investor will come along and pay more.
Crypto bears got some more evidence in their favor when the asset class lost nearly $1 trillion in a week after Tesla CEO Elon Musk said his company would stop accepting bitcoin, China said again that it would crack down on crypto, and stablecoin Tether, which claims to tie its value to the dollar, was found to be holding many fewer dollars than it had claimed.
Source Fool.com
