#BlackRock : Cryptocurrencies may still be experiencing a bubble

Asset management giant BlackRock has refiled with the U.S. Securities and Exchange Commission its application to issue an exchange-traded fund based on the spot price of bitcoin. In this new version, the company issued warnings about the risks posed by investing in cryptocurrencies.

As shown in the new presentation, accessible through the official SEC website, BlackRock emphasizes, as a legal disclaimer and risk alert, that it is possible that cryptocurrencies are still experiencing a financial bubble.

BlackRock notes that throughout 2021, the prices of many digital assets, including #BTC , experienced “extreme volatility.” This led many analysts to think that the market was going through a bubble, as price increases were followed by sharp declines in 2022.

These episodes of rapid price appreciation followed by sharp declines have occurred several times throughout bitcoin's history,” BlackRock notes, recalling the bull and bear markets that BTC has gone through in the past.

What the asset management company points out can be seen more easily in the following graph, provided by TradingView, which shows the price increases and decreases that bitcoin has had for several years.

In the middle of 2023, BlackRock says, “bitcoin prices have continued to show extreme volatility.” That is why they see it possible that digital asset markets “are still experiencing a bubble or will experience a bubble again in the future.”

The term financial bubble refers to the phenomenon that occurs in the markets due to speculation. In general, it is characterized by uncontrolled and prolonged price increases of an asset or product, which leads to a crisis when that bubble “bursts” and the price collapses.