Philip Coggan, Buttonwood columnist and capital markets editor at The Economist, argued bitcoin was nearing the “distress” stage of the classic bubble model — displacement, boom, euphoria, financial distress and revulsion. “Once the price starts to fall, the psychology changes,” he wrote. “People who bought early and were counting their millions suddenly see a dent in their wealth.
“Other people may have bought above the current price and are bitterly regretting their mistake. Bargain hunters jump in and temporarily drive the price higher but it doesn’t last. We have not yet reached the ‘distress’ stage but we might be near it.”
Coggan said fears about the security of cryptocurrencies, amid reports of North Korean hacking attempts, could be the trigger for the next sell-off.
By Thursday morning, investors were cautiously buying back in following the “cryptocalypse”, which wiped more than $US206 billion off the value of all cryptocurrencies amid fresh fears of crackdowns by regulators in South Korea and China.
