There are so many things wrong with a bubble, says Paul Mampilly. One of those things is that because of the way investors see their balance go up, they will often continue to hold onto their assets long after they should have sold. They often do not sell at the peak price because they are greedy and want to see their assets go up even more. Then, when the price starts to go down, they become desperate. Instead of being happy with their profits and selling as soon as they see it go down, they will continue to hold onto their assets because they are waiting for it to go up again. The reality is that it often does not work that way. Usually, bubbles go up once, and once they burst, they will not go up again. There is no way of knowing whether it will go up again, and it usually does not happen. By the time they realize that it was just a bubble and that it will not go up again, says Paul Mampilly, they will have already lost so much of their assets. Follow Paul Mampilly on Stocktwits.com.
Paul Mampilly believes that such is the case with regards to cryptocurrencies. He thinks that even though at the beginning, it went up very high, it will go down soon enough. The reason for this is that the only reason Bitcoin was going up in price so quickly is that it was feeding off of media reports that it ess going up. This also caused newbie investors who have no investing experience to start buying Bitcoin. The sad truth is that once the media stops reporting on Bitcoin, it will likely go down again.
One of the reasons for this, says Paul Mampilly, is that there is a limit to how much the media frenzy and public opinion can grow. There are only so many people in the world who will want to buy Bitcoin. There are only so many people in the world who even have access to the internet and can buy Bitcoin. Once Bitcoin has reached all of its possible target audience, there will be no more room for it to grow. At that point, it will start going down. It will burst, says Paul Mampilly, the expert investor who won the Templeton Foundation award for his brilliant investing skills. Then, people will be forced to accept the hard truth.
There’s little chance of a crash right now.
— Paul Mampilly (@Paul_M_Guru) February 9, 2018