In finance, the greater fool theory is the belief that one can make money by buying assets at a price that is already too high, on the expectation that the price will rise further.
The theory is named after British economist John Maynard Keynes, who said in his book The General Theory of Employment, Interest and Money (1936): “The market can stay irrational longer than you can stay solvent.”
Keynes was referring to the stock market, but the greater fool theory can be applied to any asset, including Bitcoin.
Bitcoin has been on a tear this year, with the price of a single coin rising from around $1,000 at the start of 2017 to more than $17,000 today.
NOTE: WARNING: Investing in Bitcoin using the Greater Fool Theory can be extremely risky. The theory suggests that investors buy an asset, such as Bitcoin, in the hope that someone else will pay a higher price for it later. However, there is no guarantee that this will happen and you may end up losing money if the value of Bitcoin falls. Investing should only be done after careful research and understanding of the risks involved.
This incredible run has been driven by a combination of factors, including increasing demand from Asia, hype surrounding the launch of Bitcoin futures contracts, and most importantly, a lot of new investors buying Bitcoin in hopes of making a quick profit.
This last group is where the greater fool theory comes in. These investors are buying Bitcoin not because they believe in the long-term potential of the technology, but because they think they can sell it to someone else for even more money in the future.
This type of investing is extremely risky, and often ends badly for those who get involved. Sooner or later, there will be no one left to buy Bitcoin at a higher price, and the price will crash back down to reality.
Those who bought at the top will be left holding the bag, while those who got out in time will be laughing all the way to the bank.
So is Bitcoin a bubble that’s about to pop? It’s certainly possible. But even if it is, there will always be another bubble somewhere else for investors to chase.
8 Related Question Answers Found
When it comes to Bitcoin, there is no shortage of opinions. Some people view it as the future of money, while others see it as nothing more than a speculative asset. So, what is the truth?
Bitcoin is a cryptocurrency and a payment system, first proposed by an anonymous person or group of people under the name Satoshi Nakamoto in 2008. Since then, Bitcoin has grown to become the largest cryptocurrency by market cap and has gained mainstream adoption as a digital asset and payment system. Bitcoin is often lauded for its potential as an investment.
When it comes to Bitcoin, there is a lot of debate on whether it is a scam or legitimate. Some people believe that Bitcoin is a scam because it is not backed by anything, while others believe that it is legitimate because it is a decentralized currency. Here, we will take a look at both sides of the argument to see if we can come to a conclusion about Bitcoin.
When it comes to Bitcoin, there are a lot of differing opinions out there. Some people believe that Bitcoin is a real coin and that it has a lot of potential, while others believe that it is nothing more than a fad. So, what is the truth?
Yes, Bitcoin is real money. Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
When it comes to Bitcoin, there is a lot of debate over whether it is a security or currency. There are a few key points that need to be considered in order to make a determination. First, let’s consider what a security is.
When it comes to Bitcoin, there is a lot of debate as to whether it is a currency or a stock. While there are some similarities between the two, there are also some key differences. Here is a look at the pros and cons of each to help you decide which one Bitcoin is.
When it comes to Bitcoin, there is a lot of debate as to whether or not it is a currency or commodity. There are a few key points that both sides of the argument bring up. For those who believe that Bitcoin is a currency, they argue that it functions similar to other fiat currencies.
