Bitcoin is crashing – is the “triple bubble” about to burst?
It is a reminder of the high stakes that prevail in the feverish casino that is also usually called the world economy.
What is the difference between heaven and hell? Maybe a new pair of glasses, a wise person once said.
It is an observation that has rarely felt more relevant than in the hyper-speculative times we find ourselves in.
Bitcoin is a clear example. It was created in 2009 as a response to the global gambling that the world's major banks had engaged in and that led to the financial crisis of 2008.
Bitcoin has no connection to the physical world, be it any goods or institutions such as governments, central banks or banks.
The fall has dragged popular cryptocurrencies such as Ethereum with it, and the total value of the thousands of different variants that exist has fallen by over SEK 10,000 billion in a short time.
What happened? As usual, there are many more or less advanced theories, but they are about as reliable as predicting the Champions League in oatmeal.
The true answer is that no one really knows.
In the world of finance, of course, this is not said outright. What would it look like if tens of thousands of well-paid experts just threw up their hands?
Instead, the phenomenon is described with the terms “risk-on” and “risk-off”.
One moment, the player is heading to the roulette wheel with bouncy, confident steps, filled with a feeling that a record win is close, the next moment he is seized (and it is often one he shows the research) by fear and leaves the casino.
Each time, the latter has bounced back to new records, and on Monday, some of the recent decline was recovered.
Using the word “crash” for an asset that has risen by 87,000 percent since 2013 alone is also possibly a bit misleading.
Bitcoin, whose basic idea is to be an alternative to an increasingly volatile system where new money is printed wildly, has in practice become a high-risk asset that, especially in the past year, has followed the development of other hot speculation objects, not least the AI companies Nvidia, Apple, Microsoft, Alphabet, Meta, Amazon and Tesla. These in turn drive the development of the world's stock markets and, by extension, a large part of the economy.
In recent weeks, the curves have diverged. Tech stocks have started to climb again after a decline in early November. Whether this is the beginning of a trend break or shows that bitcoin is like low-flying swallows before a coming storm is too early to say.
But in a relatively short time, there has been a clear shift in how people talk about the phenomenon, from euphoric new-build spirit to the idea that it is just a bubble.
Bitcoin's fall is a reminder of how quickly perspectives can shift.
But the "b" word can be used quite a lot these days.
The World Economic Forum, which, among other things, organizes the number one summit in Davos every year, writes in an article ahead of the upcoming meeting that the world is suffering from a "triple bubble". In addition to crypto and AI, the world's debts are breaking all records, not least when it comes to the debt burdens of various states.
These bubbles are to some extent interconnected and feed each other. The big tech companies are certainly making money, but they are also borrowing like never before to finance all the new data centers.
The interest in protecting oneself against a crash has become so great that there is even talk of a bubble for gold, which has risen by 60 percent this year alone.
Does this mean that the final collapse is near? Not necessarily.
It is often said that
That is certainly true, at least from a purely financial perspective. Even after major shocks such as the financial crisis and the pandemic, the stock markets have recovered.
But an increasingly common mistake is to use the financial market as the best reflection of how humanity is doing.
Since the beginning of 2009, the US stock market has risen by over 800 percent.
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