Bitcoin Is Unlike Any Other Bubble We’ve Seen So Far
While the jury is still out on whether Bitcoin is a bubble, one thing is certain: it‘s unlike any other bubble we’ve seen. Previous speculative asset-inflation episodes were either a one-off, like tulip mania in the 17th century, or the boom-doom cycle took many years, like gold. Bitcoin, by comparison, has survived three peak-to-trough drawdowns of over 80% in less than 10 years. The cryptocurrency surged past $40,000 last week to set an all time high. It has fallen more than 15% since then. Man Group, the worlds biggest publicly traded hedge fund firm, compares Bitcoin to Prometheus in Greek mythology, whose liver keeps growing back, every time a giant eagle pecked it out. “Every time a Bitcoin bubble bursts, another grows back to replace it,” Man Groups analysts wrote in a note dated Jan. 12. “This very frequency makes the Bitcoin narrative somewhat atypical relative to the great bubbles of the past.” Heres a table of some financial bubbles compiled by Man Group. “Instead of considering each individual spike and fall as a discrete bubble, there may be more merit in the argument that this volatility is simply part of the price discovery in a new asset class, and that these are not bubbles,