Financial Bubbles

Financial bubbles are a heaviliy researched subject. Ever since Nobel laureate Vernon Smith demonstrated how oversupply of credit can produce stock exchange bubbles, our understanding has improved rapidly. Current data suspects that about 90% of bubbles can be attributed to this one reason. A second reason is overconfidence in new technologies broad potential, a hype cycle, last experienced during the dot-com bubble of 2000 to 2001.

Bitcoint, the First Cryptocurrency

Cryptocurrency are a digital asset class created (in most cases) by a decentralized blockchain. Invented by the pseudonomous Satoshi Nakamoto, the first Blockchain, Bitcoin, reached an early peak late 2013, when it rose from a market capitization of 2bn USD to 15bn USD in less than 3 months. Followed by a rapid crash to 10bn (2/3) and a slow decline the following 2 years.

The Rise of New Cryptocurrencies

Since 2016 a new boom has been emerging steadily, while the "Bitcoin dominance" went down with accelerating spead in favor of a more diverse currency universe. 

While one could argue this diversification leads to more stability, the application of cryptocurrency is still an open question. Are they more than a speculative asset? Or will the current boom eventually burst because there is simply no buyer left?

Subsequent Expectations

Even if a major downward correction of the broader cryptocurrency market capitalisation were to take place, if may well be that subsequently one (or more) successful cryptocurrencies re-emerge.