Will the Oversupply of Bitcoin Burst the Bubble? One Analyst Says Yes

Burst the Bubble

According to a recent analysis that looked primarily at supply and demand, the Bitcoin bull run will come to an end only because of the plethora of supply, and not because of a lack of buyers, which is what everyone forecasted.

Essentially, the supply will come via new ways of trading Bitcoin, a digital currency, and from Bitcoin hard forks, which is a term used to describe a radical change to the protocol that makes previously invalid transactions/blocks valid.

Back in the late 1990’s, there was a dot-com bubble, which is where this analysis comes from. If you were a company that had .com in your name during the dot-com bubble, then you would receive a major market increase. That said, the dot-com bubble came to an end after a large number of new .com initial public offerings took over the market.

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There was a time when the market absorbed them, but eventually, the market saw the problem and corrected it, which pulled the rug out from the majority of those businesses and like Darwin said, only the strongest survived.

Bitcoin and its Supply

Perhaps one of the most important aspects of Bitcoin is its limited supply. If you were to ask anyone familiar with Bitcoin, they will tell you that only 21 mln Bitcoin will ever exist. So, the question that remains is: with such limited supply, how could an oversupply of the cryptocurrency occur?

This is not a simple question to answer as it varies depending on how you look at it. To begin, Bitcoin hard forks are now developing new derivatives from the original currency. Take Bitcoin Cash for instance: this hard fork has caused a brand new Bitcoin with a market capitalization of $26 billion.

According to the analysis,

“…as the river of ways to invest in cryptocurrencies widens, the flood that has lifted the price of the Bitcoin will surely recede, and, as always, much faster than people expect.”

Featured Image: twitter

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