What’s Next For Bitcoin In 2014?
Boom, bubble, crash. That is one of the natural cycles of markets. Whenever there is a virtuous circle of capital growth there is likely to be an acceleration of the process. The process is similar to feedback in a sound amplifier. From a tiny seed, the noise grows until left unchecked the system itself is destroyed.
When there is money to be had in asset appreciation, this signal attracts people to buy those assets and create the very appreciation that attracted them in the first place. This cycle of attraction causes a boom, then a bubble.