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Bitcoin 'Will Burst When There is No New Money to Feed It' - Analyst

© REUTERS / Dado Ruvic/IllustrationTokens of the virtual currency Bitcoin are seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017
Tokens of the virtual currency Bitcoin are seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017 - Sputnik International
With Bitcoin having lost a fifth of its value in a single day after earlier surging by more than 40 percent, Leonid Delitsin, a leading analyst at the investment holding company "FINAM," told Radio Sputnik that Bitcoin is actually a bubble waiting to burst.

Indeed, many analysts warn that Bitcoin remains a major gamble as it is very much an asset in uncharted waters.

“Many people believe that they will start to sell soon, but at the same time, they will buy in exchanges, so this game is going to be really complicated. This could make Bitcoin drop dramatically. When it drops people will think it’s time to buy before it bounces back. So it is highly unpredictable these days,” Delitsin said.

When asked what really is driving this recent strong upsurge in Bitcoin’s value, he explained it by the fact that Bitcoin is trying to fill an important gap in internet security and if it succeeds it will become ubiquitous.

Bitcoin (virtual currency) coins placed on Dollar banknotes are seen in this illustration picture, November 6, 2017 - Sputnik International
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“It will be a major new tender every electronic shop will go for. It is new technology, which has no real competitors that could try to do the same,” he added.

Many investors are still reluctant to trade in Bitcoin over concerns that it lacks regulation and could be a bubble waiting to burst.

Leonid Delitsin agreed, but noted that people always try to buy what is growing in value before it starts going down. He said there was a similar bubble in the dot.com business in the late 1990s, which exhibited fantastic growth, sometimes increasing tenfold in a matter just two months.

“This happens sometimes, but the typical period when we can observe growth like this is perhaps 20 or 30 years,” he noted.

When asked when he believes this current bubble is going to burst, Delitsin said that “it will burst when there is no new money to feed it.”

“Still, because very few people trade in Bitcoin these days, it looks like there are huge reserves, so it could increase two or three more times before it bursts. I believe it will grow to $25,000 this year, then it will suffer a 30 or 40 percent drop, but then it will recover to remain stable at $20,000 or $22,000 and what will happen next is unpredictable.”

READ MORE: Gold-Backed Bitcoin to Become New Global Monetary System?

He also mentioned the 1,000 or so rival cryptocurrencies now in the works and people inventing new financial instruments in addition to Bitcoin.

“We don’t know what else could enter the market a year from now. I believe that the main problem for Bitcoin and blockchain is that they need to show some real application,” Leonid Delitsin concluded.

The views expressed in this article are solely those of the speaker and do not necessarily reflect the official position of Sputnik.

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