Note: With the price correction of bitcoin in recent days, the People’s Daily released an article to refute the so-called “features” of Bitcoin. It might be a sign of tightening regulations.

In the past 2017, the skyrocketing Bitcoin has undoubtedly become one of the hottest topics in the world: the price of Bitcoin has folded 20 times within a year but it could also fall more than 40% in a day. At the beginning of the 2018, bitcoin continued its recent decline trending and the price fell below $ 13,000. However, compared with its price of less than $ 1,000 at the beginning of last year, the price of bitcoin still deviates from its value. Recalling early days when nobody cares about bitcoin, a man used 10,000 bitcoin to buy a pizza. At today’s price, some feel regretful and more people are worried and doubtful. How big is the Bitcoin bubble? Is it a replica of the Tulip Mania?

There is no doubt with the existence of Bitcoin bubble. Bitcoin bubble already smells fishy from its massive gain and market cap. Those so-called features: scarcity, fidelity, strong liquidity, transparency and decentralization are all disguise of speculations. It is simply impossible to support the ramping like roller coasters. The recent plunge has already explained the issue very well.

One of the sources of bitcoin’s bubble is speculation in different names. On the one hand, it is the mystery of bitcoin, including but not limited to the mystery of inventor’s identity, aurora of encryption, limited supply, etc. On the other hand, the “decentralization” feature means it is not controlled by any country, government and financial institutions. In addition, the incomplete trading platform of bitcoin sets not limit on price fluctuation, which gives speculators room to dream of quick fortune. Together with IFO and ICO, bitcoin price was driven upward.

Why bitcoin soared without support of real value? Another possibility is that there might be some trading collusion. Follow the fluctuation of bitcoin value and market reaction, we can easily find that the so-called “advantages” are intrinsic. But why they are so popular overnight? This is worth pondering. According to Bloomberg, about 40% of the world’s bitcoin is controlled by about one thousand people today. They are called “whales” by bitcoiners. Tracking the historical development of bitcoin, one may find the cryptocurrency was merely traded in a “small circle” on few platforms. One cannot help thinking of the trading collusion- some “whales” are naturally motivated to pump bitcoin price for cash.

Bitcoin is not a currency. Throughout the world, only Germany considers it as the equivalent of a “private currency.” Naturally, neither monetary nor national financial regulatory authorities will regulate bitcoin as they did with fiats. Therefore bitcoin has increasingly become a special “equivalent” in grey area.

Recently, trading of bitcoin and its derivative are in full swing. Many exchanges, including the United States, approved bitcoin futures trading but did not regulate it. This gave bitcoin a seemingly “legitimate” cloak, which also made bitcoin more like “the Tulip Mania” in the 17th century in Netherlands. “Whales” made a fortune with a clear purpose and clueless individuals follow blindly. Compared to the ATH of $ 20,000, bitcoin is in bear market. If the government strengthens regulation in the future or if its own capacity issues lead to implosion, the bubble will be shredded further. Bitcoin dropped 50 percent before and we should be careful with its future trending.