Analyst: Bubbles can be seen everywhere from Bitcoin to art

Abstract: Bitcoin, Litecoin, art...bubbles are everywhere, which is exactly what market analysts and financial officials are most worried about. For global central banks, if the problem in the past 10 years was how to deal with the financial crisis and implement various forms of monetary easing policies, then the biggest problem in the next few years is how to "cure" the sequelae left by the massive money printing in previous years.

For global central banks, if the challenge in the past decade was how to deal with the financial crisis and implement various forms of monetary easing policies, then the biggest challenge in the next few years will be how to "treat" the sequelae left by the massive money printing in previous years.

Neil MacKinnon, global macro strategy analyst at VTB Capital, told CNBC, a US financial media, that there are typical bubble signals in some assets, and the culprit for these bubbles is the "crazy" money printing by global central banks in recent years:

“Bubbles have already appeared in some asset classes, such as cryptocurrencies. Ultra-loose monetary policy has led to excessive speculation and excessive leverage in the market, which has fostered bubbles.”

"Many market commentators and even some central bankers are increasingly concerned about the threat this poses to financial stability. I think the Fed is also concerned about the risks to financial stability, and they should be. I think 2018 will be a year of challenges for policymakers, how to deal with these potential bubbles while normalizing monetary policy."

"The possible consequence (of these bubbles) is that we will see more frequent market 'flash crashes' and sharp declines, and in the worst case, a complete market collapse."

But MacKinnon believes that the banking sector has ample liquidity and is not at high risk. However, the risk may come from the current historically low volatility. For most of 2017, the volatility index (VIX) was below the historical average of 20.

Bitcoin has dominated financial news headlines almost every day this year. Bitcoin's price on London digital trading platform CEX.IO broke through $20,000 over the weekend, but it has not continued to hit new highs this week. As MacKinnon said, the Bitcoin market is witnessing "plunges" more and more frequently.

South Korean trading platform Youbit announced on Tuesday that it would file for bankruptcy after being hacked. Since then, Bitcoin has fallen by about 8.6% from its intraday high. After the US Securities and Exchange Commission suspended the trading of a digital currency business company's stock, Bitcoin fell by nearly $1,000 in an hour, a 10% drop on the day.

Another digital currency, Litecoin, has surged 7,000% this year. The digital currency market has experienced such dramatic ups and downs that professionals consider it impossible to trade, and many financial tycoons have expressed concerns about the Bitcoin craze.

Compared with Bitcoin, the art market, which has a higher threshold, seems to have received less attention, but the enthusiasm of the art market this year is comparable to that of Bitcoin, which can be called a golden age of art. Last weekend in China, a group of paintings by Qi Baishi, "Twelve Landscape Screens", were sold at a "sky-high price" of 931.5 million yuan. Last month, Leonardo da Vinci's painting "Salvator Mundi" was also sold overseas for 450.3 million US dollars (about 2.972 billion yuan), setting a record for the highest price in the history of art auctions.

In November this year, the art investment market experienced a crazy week, with transactions exceeding $2 billion in 5 days. Christie's, Sotheby's and Phillips sold paintings by artists such as Leonardo da Vinci, Van Gogh and Andy Warhol, with total revenue including commissions reaching $2.18 billion. At that time, analysts at the auction houses believed that the driving force behind the high auction prices of art may be buyers from Asia, especially from China.