Demystifying Cryptocurrency bubble!
Bitcoin has been labelled a speculative bubble by many including former Fed Chairman Alan Greenspan and economist John Quiggin. Nobel Memorial Prize laureate Robert Shiller said that bitcoin "exhibited many of the characteristics of a speculative bubble". On March 14, 2014, the American business magnate Warren Buffett said, "Stay away from it. It's a mirage, basically. Two lead software developers of bitcoin, Gavin Andresen and Mike Hearn, have warned that bubbles may occur. David Andolfatto, a vice president at the Federal Reserve Bank of St. Louis, stated, "Is bitcoin a bubble? Yes, if bubble is defined as a liquidity premium." According to Andolfatto, the price of bitcoin "consists purely of a bubble," but he concedes that many assets have prices that are greater than their intrinsic value. Journalist Matthew Boesler rejects the speculative bubble label and sees bitcoin's quick rise in price as nothing more than normal economic forces at work. The Washington Post pointed out that the observed cycles of appreciation and depreciation don't correspond to the definition of speculative bubble.