Is Bitcoin a Bubble Waiting to Pop?

Bitcoin, and whether there’s a bitcoin bubble, has been the talk of the town recently. The amount of questions I have received about it, cryptocurrency and blockchain in the past month is truly insane.

For example, over the past week, I have been involved in a series of meetings in Chicago and the topic has arisen endlessly. Even at dinner, where nobody has any ties to cryptocurrency, bitcoin and the like have taken center stage and I’ve been put on the spot to provide my thoughts.

So today I’m voicing my opinion for everyone. Yes, cryptocurrencies and blockchain technology are real and here to stay. And also yes, bitcoin is the current leader in the cryptocurrency world.

But the bigger question here is whether the recent (and ongoing) parabolic move in bitcoin is a bubble that’s about to burst or the start of something much, much bigger. I tend to believe the latter.

There’s no question that bitcoin is overdue a pullback, and when it inevitably occurs it will take place in one of two ways: The cryptocurrency could tank upward of 20% in a matter of minutes, or it could undergo an orderly pullback of 20%-plus that takes place over a couple weeks.

How the pullback happens is somewhat irrelevant, though, as the media will no doubt tout it as the bitcoin bubble bursting. So in that sense, yes, bitcoin is forming a bubble in the near term.

But here’s my question to you: if bitcoin falls from $16,000 to $5,000 before rallying to $100,000, can you really call that a bubble today?

The answer to that question is subjective, so let me just say now that if bitcoin does dip back to $5,000, I will certainly be an aggressive buyer.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.

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