The Bitcoin Bubble Is Beginning to Burst on Wall Street
There has arguably not been a hotter investment opportunity in 2017 than cryptocurrencies, which as an aggregate had seen their market caps grow by more than 800% at one point, year to date. But no cryptocurrency is more popular than bitcoin, which comprises nearly half of the digital currency market cap despite there being almost 1,000 cryptocurrencies consumers can purchase. Bitcoin began the year below $970 a coin, but recently neared the $5,000 mark.
Weakness in the U.S. dollar is a big reason why cryptocurrencies have been on fire. A weaker dollar is great for U.S. exports, but it's not such great news for investors or consumers who are witnessing their purchasing power deteriorate. Investors will usually seek the safety of gold when the U.S. dollar is sinking since gold is a finite resource that's been used as a currency for centuries. However, cryptocurrencies like bitcoin have been just as popular (if not more popular) of late given that protocols within bitcoin limit the number of coins that can be mined to 21 million. In effect, bitcoin is a finite resource, too, making it a perceived store of value as the dollar falls.
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Source: Fool.com
