Are Cryptocurrency Prices In a Bubble?

Predicting Crypto Prices

An article on CNN Money compares the current state of the cryptocurrency market with history’s worst bubbles. The publication claims that price surges do not end well. It quotes Warren Buffet who believes the cryptocurrencies “should be outlawed.” According to the investor, the cryptocurrencies have all the hallmarks of a speculative bubble.

Late last year, the price of Bitcoin hit the $20,000 mark. As a result, it attracted a wave of investors, most of them quite inexperienced. Unfortunately, the investors are now sitting on huge losses thanks to massive price corrections this year. In fact, data from CoinMarketCap indicates that Bitcoin is now grossing at $6,454.23 against the US Dollar. As result, the recent price crushes have left professional investors and enthusiasts in confusion. Market players are not in consensus on where the cryptocurrencies will from here. According to an article on the CryptoCoin reporter, cryptocurrency prices are difficult to predict. However, the publication notes that with appropriate data analysis methods, one can predict the prices. It says:

“There is a big “time-series cryptocurrency momentum” at both weekly and daily frequencies of the three leading cryptocurrencies. Noting the example of Bitcoin, the report shows that the current return statistically predicts returns for the coming week.”

A Further Market Correction?

Nonetheless, the crypto price is proving difficult to calculate. Recent reports indicate all the top ten coins are down. Data from BitInfoCharts indicate that Bitcoin and other major altcoins are trading in the red. In fact, Tether is the only one of the major altcoins experiencing a gain at the time of press. This fall in prices comes just days after positive news that indicated the cryptocurrencies rising July’s poor performance. According to market analysts, it seems Bitcoin will take longer before it breaks the psychological $7,000  boundary.

Even the positive performance by Ripple (XRP) in the past week belongs to the past. In light of a raft of announcements, the coin surged to historical highs. In fact, data on CoinMarketCap indicates that the token supplanted Ethereum for a moment becoming the second best token. However, XRP’s price dropped again sending it back between Ethereum and Bitcoin Cash.

Can Investors Hold on?

Many cryptocurrency investors are reporting huge losses. In fact, one investor reports that he is sitting on a 96% loss from investments made last year. He made the investment last year and in one month’s period, he had $15,600 in earnings. However, of the $120,000 initial investment, he remains with less than $5,000. Clearly, this is a stressful time for investors and crypto enthusiasts. In fact, one analyst observes that without proper hedging mechanisms in the market, many investors will leave. Basically, what an investor looks for is profits and an ability to hedge them. It remains to be seen what is behind the recent rally. However, enthusiasts urge for calm and hope that the market will approach normalcy.

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