Bitcoin is such a controversial topic that when I talk about its advantages, I get a
lot of positive feedback, especially from enthusiasts.
But whenever I talk about its flows, these are the types of comments I get.
Thank you, Unsubbed!
You have no idea about cryptocurrencies and blockchain technology, unsubscribed.
This is when smart people become dumb!
However, whether you like it or not, a lot of people lost money by investing in bitcoin.
On the other side, some people made incredible fortunes.
So In this video, let's try to understand what really happened to bitcoin and cryptocurrencies
in general.
Why did it dramatically jumped to 20K dollars and then suddenly crushed!
Remember when bitcoin just came out.
No one gave a damn about except its true fans.
So it was growing slowly.
In fact, within the first 5 years, its price didn't even cross 50$.
Most people didn't hear about its existence leave alone the technology behind it.
But as its price started growing to a hundred dollars and above, some investors noticed
it and those who understood its potential gave it a shot and decided to invest.
That demand further increased the price and in the next couple of years, by the summer
of 2016, it crossed 500 dollars.
At this point, the media started talking about it and it gained some popularity.
More and more investors realized the potential opportunity to make money.
So they threw some cash into it.
And within the next 6, 7 month by January of 2017, the price has doubled and reached
a thousand dollar.
The media quickly spread the message, people all around the world were talking about it.
It was the new hot thing to invest, it was like the new internet.
In fact, a new cryptocurrency would come out every day.
There were hundreds if not thousands of different cryptocurrencies in the market already and
people were throwing money into them hoping to make a fortune which further skyrocketed
the prices.
Some investors bought large sums of bitcoin to artificially inflate the price to attract
more people.
By summer of the same year (2017), bitcoin hit a new record.
At that moment, celebrities, singers, athletes even people who had absolutely no idea what
on earth is a cryptocurrency decided to jump on the board.
This huge demand inflated the price by thousands of dollars.
and but by 17th of December, it peaked at almost 20 thousand dollars ( $19,783.06).
And the same thing was happening to everything cryptocurrency such as Ethiruim, Litecoin
and so on.
Remember all of those people who invested in bitcoin when it was still under a thousand
dollar and those who artificially inflated the price.
They were waiting for this moment.
Their investments now worth millions of dollars, so they cashed out.
That slightly decreased the prices which led other investors to panic and sell before prices
plummet further.
The media quickly spread the news that the price of bitcoin is falling.
That created a bigger panic in the market since all of those people who invested in
cryptocurrencies but didn't really understand how they work were scared to lose all of their
investments, so everyone started selling to minimize losses.
This oversupply drove the prices down and in a matter of a month, bitcoin lost half
of its value.
And since people were scared to invest again, prices started falling over time and now they
around 3600 dollars.
This graph is called the Gartner Hype Cycle.
When a new technology comes out.
It’s usually only popular among the enthusiast.
But when it gets picked by the media, it blows up because they have to dramatize and exagurate
to get more views.
And in a short period of time, it gets extremely popular.
That's when everyone talks about how this technology is going to change the world.
How cryptocurrencies are going to replace the banks and the entire financial system.
However, at some point, we realize we have been too optimistic and are still far away
from that bright future.
The technology seems to have great potentials however, there are many challenges we have
to overcome before it can be truly useful.
So that dramatic rise is followed by a sudden even faster fall.
That is where most technologies die.
However, if it's a truly useful technology, it will gradually grow again.
And bitcoin is somewhere around here.
Whether it's going to make it or not, we will have to wait and see, however, its dramatic
rise and sudden fall weren’t random but a cycle that every technology goes through.
And if you take a look at the development of the internet, it went through the exact
same cycle, but it's downfall was way more significant than bitcoin and resulted in a
dot com bubble.
Fast forward to today, after 20 years, the internet has become an essential part of our
life.
And if cryptocurrencies are going to make it, in 10 or 15 years we will see their true
potentials.
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