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On March 14, Allianz, an $ 81 billion investment company, reported in a report published by the head of the world economy Stefan Hofrichter that the cryptocurrency market, regardless of its liquidity, is a bubble.
Intrinsic Value Again
Hofrichter stated that cryptocurrencies like bitcoin have no intrinsic value and that the base value of cryptocurrencies is zero.
"In our view, its intrinsic value must be nil A bitcoin is not a claim on anyone – unlike, for example, sovereign bonds, stocks or paper money – and it does not generate any revenue streams.
The disappearance of Bitcoin would have little spillover effects on the "real world", since the market for this cryptocurrency is still relatively small. As a result, we believe that the risks to financial stability arising from bitcoin are negligible – at least to this day, " says Hofrichter.
However, as asserted numerous times by respected analysts and bankers like Goldman Sachs' CEO, Lloyd Blankfein, the concept of intrinsic value is flawed and the base value of the assets does not. just does not exist. For example, equities, commodities and fiduciary currencies do not have intrinsic value either, as their value depends solely on the supply and demand sought by the free market.
Emphasizing that multi-billion dollar conglomerates rely on digital trust and therefore have no intrinsic value, Fundstrat analyst Tom Lee explained:
"If you ask a baby boomer" Can you justify the value of anything that is a digital affair? "They probably do not accept that Facebook, Google, Netflix, Amazon, Apple, in the S & P 500 and these are mostly digital businesses built almost exclusively on digital trust."
The value of cryptocurrences as bitcoin derives from their security, the decentralized protocol and the distributed network of nodes, miners and users who support the network. The computing power of the bitcoin network has increased to a point where no entity or organization can ever match, prohibiting or eliminating the possibility of double spending, or taking advantage of the system to produce more digital currencies.
More importantly, unlike the stock market and other private markets open only to registered investors and brokers, the cryptocurrency market is public. Any investor can exchange or invest in cryptocurrencies. As such, bitcoin and other major cryptocurrencies have become more liquid than any other stock or asset on the global stock market.
Search Engine Results
Box Mining, a renowned cryptocurrency analyst, has revealed that the number of searches on Google's search engines for the keyword "bitcoin bubble" has actually decreased since the end of 2017.
At least, no one is worried about the Bitcoin Bubble #Bitcoin #cryptocurrencies #BitcoinBubble. pic.twitter.com/d0lEbwfctS
– boxmining (@boxmining) March 14, 2018
The main correction that took place on the cryptocurrency market in January and February showed that because of its liquidity, long-term bubbles in the cryptocurrency market are not formed . Short-term bubbles implode with minor and major corrections, with the value of major cryptocurrencies dropping by 50-70% at certain times.
Therefore, describe the entire market as a bubble by neglecting investors, institutional and retail investors with billions of dollars in capital, and the daily trading volume of 13.5 billion market dollars is highly incorrect.
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