What Does Bubble in Cryptocurrency Mean?
The price of cryptocurrencies, much like Bitcoins, can rise abruptly from speculative intentions and enthusiasm instead of intrinsic worth when a crypto bubble happens. For anyone wondering- “What Are Crypto Bubbles?”. A cryptocurrency bubble is similar to a balloon in the fact that it expands with air when more investors want to join the bandwagon for fast profits.
However, just like any other type of bubble, these ones can explode leading to a drastic drop in rates. In history there have been several such instances with Bitcoin; one of them being in 2017 when its price surged up to nearly $20000 before falling down to around $3000 the following year.
How To Identify a Bubble Coin?
- Folly area of cryptocurrency indicates fast price increase, high variability and large volume of exchange.
- Fear of missing out (FOMO) drives people to invest leading to the expansion of the bubble.
- We have seen similar instances in recent days when a number of analysts predicted the emergence of what they called bubble coins which are actually cryptocurrencies which have been so much exaggerated that they risk collapsing.
Protecting Against a Burst Bubble
It’s very important that investors spread out their investments so as to be equipped in case anything unwarranted happens; they should also keep track of what is happening in various markets, apart from fantasy tweets never intended for the public ear and those big fat ones with endless hype about celebrities whose only strength is their bank accounts.
The Fear and Greed Index is amongst the tools used by Investors to assess how investors feel about something taking place or what is in vogue at a given moment. In this way, even when coin markets crash, disciplined investors are likely to manage risks.For more such informative reads, stay tuned at ReadingCrypto!
