The Personal Finance series with Warren Ingram

Bitcoin may (or may not) be a bubble. Check this out before taking the plunge

Is Bitcoin a bubble?

In other words, is the spectacular rise in the value of Bitcoin based in reality, or is it unlikely to last?

That is the question The Money Show’s Bruce Whitfield put to Galileo Capital Personal Financial Advisor Warren Ingram.

Ingram answered the question by comparing the current popularity of investments in Bitcoin to the Tulip Bubble, the Ostrich Feather Bubble and the South Sea Bubble.

Tulip mania

The tulip bubble began in 1633.

At one point tulips increased in value by 20 times in a month!

At the peak of the market you could trade a single tulip for an entire estate!

Every bubble eventually bursts – the tulip bubble popped in 1637 when prices dropped and panic selling began.

It wasn’t long before tulip bulbs were trading for about the same price as a single onion.

Ostrich Feather Bubble

Feathers boomed between 1890 and 1914.

At their peak you could get more money for a kilogram of feathers than a kilogram of gold!

South Sea Bubble

Even Isaac Newton was a victim of a bubble, namely the South Sea Bubble.

The South Sea Bubble was one of the first famous financial bubbles of modern times.

It took place between 1711 and 1720.

Newton bought shares in the South Sea Company - the hottest stock in England.

He sold and made 100% profit.

But he got greedy and reinvested at a price close to the peak.

He held on when the bubble started bursting, only selling once the price completely collapsed to far below what he paid.

This is, according to legend, the event that prompted him to exclaim, “I can calculate the movement of stars, but not the madness of men!”

Stocks in the South Sea Company were traded for 1000 British pounds at their peak (unadjusted for inflation).

By 1720 they were worth nothing.

Is Bitcoin a bubble?

How do you know if Bitcoin is overvalued?

Unlike shares; the digital currency makes no profits.

It’s also not backed by a central bank or government, so you can’t view it as a currency or compare it to other currencies.

Bitcoin is up by about 200% so far in 2017.

For more detail (and an answer to the question); listen to the interview in the audio below.

Click here (then “like” the page) to follow Bruce on Facebook.

Enter your email address in the form below to receive a newsletter containing the most-read articles of the week from Bruce Whitfield’s The Money Show every Friday morning in your inbox.

Subscribe to our Business Wrap Newsletter

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
How to plan for the inevitable political uncertainty of the next 24 months

How to plan for the inevitable political uncertainty of the next 24 months

The Money Show’s Bruce Whitfield interviews Personal Financial Advisor Warren Ingram.

Huge study clearly shows how chopping and changing investments destroys wealth

Huge study clearly shows how chopping and changing investments destroys wealth

Trading is bad for your wealth. Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram.

How to generate income from your investments

How to generate income from your investments

Property, shares, income unit trusts… Ray White interviews Galileo Capital Personal Financial Advisor Warren Ingram.

Buy Bitcoin, get rich? Here’s whether you’re missing out on a goldmine…

Buy Bitcoin, get rich? Here’s whether you’re missing out on a goldmine…

The Money Show Bruce Whitfield interviews famed tech commentator Simon Dingle.

Bitcoin bonanza offers SA investors the chance to make a quick buck

Bitcoin bonanza offers SA investors the chance to make a quick buck

On April 2 a Bitcoin was worth $1079. By May 2 it was worth $1428.

How tech is threatening banks in South Africa (and changing money, forever)

How tech is threatening banks in South Africa (and changing money, forever)

Financial institutions, adapt or die! Rand Merchant Investments’ Dominique Collett discusses 2017's major "fintech" developments.

Popular articles
Hassen Adams (he brought Burger King and Dunkin’ Donuts to SA) talks money

Hassen Adams (he brought Burger King and Dunkin’ Donuts to SA) talks money

The Money Show’s Bruce Whitfield interviews Adams about his attitude to money (hopes and fears, successes and failures, etc.).

Eusebius Opinion: "Let go Kevin Pietersen, you do not own the school"

Eusebius Opinion: "Let go Kevin Pietersen, you do not own the school"

McKaiser responds to former SA, now England cricketer Pietersen's comments over Maritzburg College pupils holding EFF t-shirts.

Twitter is gobsmacked as Nigeria honours Jacob Zuma with bronze statue and road

Twitter is gobsmacked as Nigeria honours Jacob Zuma with bronze statue and road

During Zuma's visit to Nigeria, the Governor of the Imo State in Nigeria, Mr Owelle Okorocha, conferred an Imo Merit Award on him.

Minister Lynne Brown's partner scored R1.2 million contracts with Eskom

Minister Lynne Brown's partner scored R1.2 million contracts with Eskom

Sikonathi Mantshantsha says this revelation explains why Brown was reluctant to take any action against Eskom executives.

KZN school ordered to stop action against students with EFF shirts

KZN school ordered to stop action against students with EFF shirts

A letter has been addressed to the Maritzburg College principal after an image of the boys went viral last week.

Kloof Street residents living in fear as crime multiplies

Kloof Street residents living in fear as crime multiplies

A Cape Town man was stabbed to death on Saturday while trying to assist two women who were being mugged on Kloof street.

‘I started my thriving business with R5000 (and made a profit in the 1st month)’

‘I started my thriving business with R5000 (and made a profit in the 1st month)’

After 3 years there are 3 Nic Harry stores (incl online) that sell 100 000 pairs of socks in over 20 countries around the world.