The term "crypto bubble" signifies a situation wherein the values of cryptocurrencies surpass the anticipated or underlying values under specific circumstances. Much like an actual bubble, crypto prices escalate akin to the bubble soaring in the air before abruptly plummeting downward. A multitude of factors contribute to the formation of the crypto bubble, and likewise, diverse factors are responsible for the burst of such bubbles. Let's delve into the historical workings of the crypto bubble and debunk the prevailing myths associated with it.

The crypto bubble holds a prominent place in the vocabulary of crypto investors, substantiated by historical evidence. Bubbles are ubiquitous across various industries, characterized by a surge in the value of a specific asset followed by a subsequent decline. Drawing a parallel, an investor once likened the crypto bubble to the dot com bubble of 1995-2000, a period when demand skyrocketed, numerous internet companies prospered, and technological advancements thrived. However, this prosperity was short-lived as the bubble eventually burst, leaving only a few companies to emerge dominant in the market. Another illustration worth noting is the housing or real estate bubble of 2008, where the industry flourished until the collapse of the banking sector triggered the downfall of the real estate bubble.

The history of the crypto bubble unfolds through four notable instances that serve as proof of its existence. Episodes when crypto prices plummeted led to widespread claims labeling the entire crypto market as a bubble, with even renowned figures like Warren Buffet weighing in on the debate. These downturns or bursts of the crypto bubble are often linked to factors such as investor sentiment. If a surge of investors rushes to sell a particular cryptocurrency, its price may witness a drastic decline, marking the collapse of the crypto bubble. The first instance dates back to 2011 when Bitcoin struggled around the $1 mark in February, dipped to $0.67 by April, peaked at $29.58 in June, and then tumbled to a mere $2.14 by November.

The second significant occurrence transpired when the price of Bitcoin surged to $1,127.45 in November 2013 only to plummet to $172.5 by January 2015. Undoubtedly, the most widely discussed crash occurred in 2018, famously referred to as the "Great Crypto Crash." During this period, numerous cryptocurrencies saturated the market, and in the aftermath of Bitcoin's decline, the entire crypto market witnessed a substantial devaluation, plummeting by 78% in January 2018. The most recent crash unfolded between 2021 and 2024, with Bitcoin reaching an all-time high (ATH) value of $69,000 in November 2021, only to nosedive to $16,530 in January. Concurrently, the Terra Luna cryptocurrency also suffered a significant crash, plummeting from $119.51 to $0.10. This crash raised eyebrows as the token was a stablecoin pegged to the US dollar, yet it experienced a substantial price decline.

One prevalent myth surrounding the crypto bubble pertains to the imminent collapse of the crypto market, with speculations suggesting that the next instance of the crypto bubble will obliterate the market to zero. However, this notion is not entirely accurate. While the market may face scenarios leading to collapse, hitting rock bottom is not an inevitability. With over 2.2 million cryptocurrencies in circulation, some may indeed vanish, yet several others are poised to endure, ensuring the vitality of the crypto market. The market's resilience is contingent upon a myriad of factors, and occasional volatility and setbacks are insufficient to dismantle the $2.45 trillion market.

Conclusively, cryptocurrency, as a bubble, has been a longstanding topic of debate. The perpetual discussion surrounding its existence remains inconclusive. Nonetheless, one undeniable truth is the presence of the crypto bubble and its reverberating influence on the industry. Throughout history, the crypto bubble has burst on numerous occasions, causing values to plummet, albeit never reaching absolute zero.