There’s no denying that we are in a bubble when it comes to bitcoin. Even at the writing of this article the price of bitcoin has gone up to $13’000 AUD. I repeat. A single bitcoin could buy a small car. A single bitcoin could buy a second-hand Harley Davidson.

To really put things in perspective, the historical event known as the “pizza event” (where the original bitcoin transaction was used to buy a pizza) is now worth several billion dollars. So the real question is, are we in a bubble? Will the bubble burst?

It’s easy to get into that feeling of “I missed out” and honestly, we all are in the same boat. I had a friend who bought $50 worth of bitcoin almost 5 years ago. He now has $5000, and is showing no signs of slowing down. He hasn’t bought any since, but that doesn’t really matter. At this rate he would be set for life. But as we all know, there must be an end to this madness.

To really understand what a bubble is, we only need to look back a few decades to tech bubble of the 2000s. The same hallmarks from that bygone era are here and now, but we are most likely only in the early stages of the bubble.

We are seeing new hype about the price of bitcoin happen almost daily. Bitcoin as a buzzword has taken on a life of its own. It must be incredibly difficult for people to stand back and watch this continuously rising price and wonder “why am I not buying in?”. With all the press that bitcoin is getting, these bare all the hallmarks of a bubble. To answer the proposed question, yes, we are most likely in a bubble.

As the famous investor Warren Buffett said, it’s only when the tide goes out that you realise who is swimming naked. If we are in fact in a bubble with bitcoin, we must realise that there is no way out of this without seeing an inevitable drop. As the price of bitcoin may rise higher and higher, there may be no stopping the trajectory of bitcoin for the next few years at least. During this time, many people will buy into bitcoin and their feeling of FOMO (fear of missing out) will kick in.

The drop will probably come amid scandal, or of being overtaken by the growth of Ethereum. It’s really difficult to predict when this will be, or even if it will happen at all, but it is this authors belief that it will.

So, in short, don’t buy it if you think we could be in a bubble. In the tech bubble only a few years ago, many investors lost a lot of money based on the fact that they thought any investment could be worthwhile.

If Bitcoin is in a bubble, it’s probably not a great idea to invest right this very moment. If you have a stable source of income, good health, family and all the other things that really matter, don’t bet the house on bitcoin. That’s where you really end up hurting yourself, by focusing on making money over all the other important things in life.