In the 17th century, the price of Dutch tulips ran up to incredible levels before collapsing, ruining many who participated in the first well-documented bubble. We are not knowledgable about horticulture, but we are sure that those Dutch tulips were fine specimens and produced wonderful flowers. And this is where bubbles generally begin. There is a good story.
On March 3, we published a video (Is Bitcoin Money?) in which we said that Bitcoin is built on interesting technology and has unique features that enable some commerce that would otherwise not be possible. We did not express an anti-Bitcoin position, but we did argue that Bitcoin is not money, it’s an irredeemable currency. We also noted that Bitcoin might be a good speculation, the Bitcoin price had had a great run-up in price and therefore the risk was increasing that it could crash. Since then, the Bitcoin price has almost doubled.
We are not Monetary Electrons, and we do not attempt to forecast Bitcoin prices. We do note with wry amusement that one commentator said that “gold has been collapsing in Bitcoin terms for years.” This kind of cart-before-the-horse thinking, much less hyperbole, is a warning signal. We don’t recall it becoming quite so extreme as that, in silver in April 2011 (though it was pretty extreme).
There may be further speculative gains in Bitcoin. Or not. But this is a scary-looking chart.