The Bitcoin Bubble: What Happens When There is Too Much Money Being Printed

If you’re like me, these have been the headlines you’ve seen all day everyday for the last six months. . .

“Bitcoin Surges to New Record Highs!”

“Crypto Revolution: Don’t get Left Behind!”

“Bitcoin is Making Millennials Millionaires Overnight!”

“Investors Clamor into Crypto-Currencies to Find the Next Bitcoin!”

Convoy Investments recently made a beautiful graphic showing us how bitcoin sits against the rest of the speculative manias throughout history.

Look for yourself if you think I’m being too hard on the Bitcoin and crypto fad. . .

Don’t get me wrong – I love the idea of Bitcoin.

But it has gone completely mad.

There is one thing that stands out to me though. . .

Unlike the Tulipmania-Era (early 1600’s) and Mississippi Bubble Era (early 1700’s) – fiat money today is in total control.

Back then, paper money was backed by precious metals – like gold and silver.

There weren’t central banks printing – rather adding zeros to virtual bank accounts – trillions in paper money.

So, I am not surprised crytpo-currencies have blown up this fast.

Think of it this way. . .

Imagine you have a pyramid of plastic cups. And there is a faucet pouring water into the top cup.

Over time it will overflow from the top cup and start filling up the next two cups underneath it.

And after some more time, it will overflow those cups and go into the four below it.

And so on and on. . .

That’s what is happening in our markets because of Central Bank liquidity – money printing and low interest rates.

There are literally trillions of Euros, Yen, Dollars, and other paper currencies sloshing around into ‘hot’ markets.

Notice how the price of Bitcoin was dead – flat – for years?

Then, all of a sudden, it exploded.

It follows an eerily similar path as every other major bubble in history.

It’s like they say. . .

“There isn’t anything new to how these things go – only new instruments and devices this time following the same cycle over and over.”

But what really interests me is what’s next. . .

What comes after Bitcoin?

What caused this sudden perception to change? Why did it suddenly take off out of no where?

All that money making its way through markets was bound to cause rapid and crazy gains.

Bitcoin is a bubble, but we’re calling for it to go A LOT higher before it crashes.

We wouldn’t be surprised one bit to see the coin hit $20,000-$25,000 before the end of 2017.

Sound crazy? Not for a bubble this big.

Long term this is great for gold: nothing has drawn this much attention to fiat money alternatives since Ron Paul ran for president.

And as that attention rises and grows stronger, more money will be seeking decentralized investments. Just a little interest in gold can send prices flying.

In 2011 gold peaked around $1975. . .

Next time, I’m sure it will surpass that – by a lot.

We need to be ready.


Christoph Grizzard, The Fat Cat Investor





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