2 factors have created a world where these bubbles are possible:
- Super exponential money printing
- Lack of engineers means there is a shortage of real investment opportunities. This shortage of investment opportunities is exacerbated now that the stock market seems pretty maxed out. There is also an increased demand for high return opportunities because the finance sector has gotten so big and so many of the smartest people are working in it now. All these highly paid people on wall street need high returns in order to justify their salaries and the increased size of the finance sector. This is a double whammy because many of those people now chasing bubbles in the finance sector are people who could have been great engineers
This has created an incentive for people to invest in these bubbles and work tirelessly on pumping them up by spreading good news about them. As more people buy bitcoin more people will have incentive to pump it up.
I would expect all of these factors to continue but what would make it stop at some point? 2 theories:
- maybe it won't but the bitcoin will depreciate relative to consumer goods because of rising prices. This is more so what I expect to see with the stock market
- At some point bitcoin will start flat lining or at least slow down. There is no such thing as exponential growth. What looks like exponential growth is always just the beginning of an s-curve because there are physical finite limits. On the other hand things could be different this time since the total amount of available dollars depends only on numbers in a computer. But if it does flat line then many people including me will pull out pretty quickly. In fact I temporarily pulled out before when it was oscillating between 30k and 40k because my loans were collecting interest during the period. So it could be people's impatient expectation of fast returns that causes a chain reaction of people pulling out.
But in the short term I think bitcoin will do well. It still has a lot of room to grow. In the near future, the money printing will continue and there aren't a lot of other good options for where to put that money