The future of BTC based on historical financial bubbles


From Wikipedia,

>An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania, or a balloon) is trade in an asset at a price or price range that strongly exceeds the asset’s intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future.

BTC is a bubble because its value almost entirely speculative. Its real world advantages to fiat are minuscule while having significant downsides.

There are details of every economic bubble resulting from over-speculation since 1950 below.

**The Poseidon bubble**

>The Poseidon bubble was a stock market bubble in which the price of Australian mining shares soared in late 1969, then crashed in early 1970.
>
>In the late 1960s, nickel was in high demand due to the Vietnam War, but there was a shortage of supply due to industrial action against the major Canadian supplier Inco. These factors pushed the price of nickel to record levels, peaking at around £7,000/ton on the London market early in November 1969. In September 1969, the mining company Poseidon NL made a major nickel discovery at Windarra in the Shire of Laverton, Western Australia. In early September their shares had been trading at $0.80, but as information about the discovery was released, the price rose until it was trading at $12.30 on October 1. After this, very little further information came to light, but the price continued to climb due to speculation; at one point, a UK broker **suggested a value of up to $382 a share.** By the time Poseidon actually started producing nickel, the price of nickel had fallen. Also, the nickel ore was of a lower grade than originally thought, so extraction costs were higher. Profits from the mine were not sufficient to keep Poseidon afloat, and in 1976 it delisted. [Western Mining](https://en.wikipedia.org/wiki/WMC_Resources) then took over the mine, operating it until 1991.
>
>By the time Poseidon actually started producing nickel, the price of nickel had fallen. Also, the nickel ore was of a lower grade than originally thought, so extraction costs were higher. Profits from the mine were not sufficient to keep Poseidon afloat, and in 1976 it delisted. Western Mining then took over the mine, operating it until 1991.

[https://en.wikipedia.org/wiki/Poseidon_bubble](https://en.wikipedia.org/wiki/Poseidon_bubble)

**POS now trades at $0.037 AUD per share.** Over-speculation in something that turned out to be near worthless led to its share going to 0. BTC could share the same fate if it does not prove superior to fiat. Note that POS still has value as a mining company.

**The dot-com bubble**

>The dot-com bubble was a historic economic bubble and period of excessive speculation that occurred roughly from 1997 to 2001, a period of extreme growth in the usage and adaptation of the Internet.
>
>Most dot-com companies incurred net operating losses as they spent heavily on advertising and promotions to harness network effects to build market share or mind share as fast as possible, using the mottos “get big fast” and “get large or get lost”. These companies offered their services or products for free or at a discount with the expectation that they could build enough brand awareness to charge profitable rates for their services in the future. In January 2000, there were 16 dot-com commercials during Super Bowl XXXIV, each costing $2 million for a 30-second spot.
>
>The “growth over profits” mentality and the aura of “new economy” invincibility led some companies to engage in lavish spending on elaborate business facilities and luxury vacations for employees. Upon the launch of a new product or website, a company would organize an expensive event called a dot com party.

[https://en.wikipedia.org/wiki/Dot-com_bubble](https://en.wikipedia.org/wiki/Dot-com_bubble)

https://i.redd.it/a35qj9bk3p611.png

Summarising, people were sucked into buying shares from companies that were not actually profiting (growing in real value) believing they could get rich quick. Once prices got too high, people sold and the bubble popped. **It took 16 years for the index to return to the previous high**. The value of the index currently sits at 7445.08. Note that internet-based companies have much greater real-world value than BTC currently.

**Japanese asset price bubble**

>The Japanese asset price bubble was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated. In early 1992, this price bubble collapsed. The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices had been closely associated with excessive monetary easing policy at the time.
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>By August 1990, the Nikkei stock index had plummeted to half its peak by the time of the fifth monetary tightening by the Bank of Japan (BOJ). By late 1991, asset prices began to fall. Even though asset prices had visibly collapsed by early 1992, the economy’s decline continued for more than a decade. This decline resulted in a huge accumulation of non-performing assets loans (NPL), causing difficulties for many financial institutions.

[https://en.wikipedia.org/wiki/Japanese_asset_price_bubble](https://en.wikipedia.org/wiki/Japanese_asset_price_bubble)

With the aid of government policies, ‘the Nikkei has periodically risen above 1991 values since, as of 2017 it remains below 1991 values.’

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