Whereas the jury continues to be out on whether or not Bitcoin is a bubble, one factor is definite: it’s not like every other bubble we’ve seen.
Earlier speculative asset-inflation episodes have been both a one-off, like tulip mania within the seventeenth century, or the boom-doom cycle took a few years, like gold. Bitcoin, by comparability, has survived three peak-to-trough drawdowns of over 80% in lower than 10 years. The cryptocurrency surged previous $40,000 final week to set an all time excessive. It has fallen greater than 15% since then.
Man Group, the world’s greatest publicly traded hedge fund agency, compares Bitcoin to Prometheus in Greek mythology, whose liver retains rising again, each time an enormous eagle pecked it out.
“Each time a Bitcoin bubble bursts, one other grows again to exchange it,” Man Group’s analysts wrote in a word dated Jan. 12. “This very frequency makes the Bitcoin narrative considerably atypical relative to the good bubbles of the previous.”
Right here’s a desk of some monetary bubbles compiled by Man Group.
“As a substitute of contemplating every particular person spike and fall as a discrete bubble, there could also be extra benefit within the argument that this volatility is solely a part of the worth discovery in a brand new asset class, and that these aren’t bubbles, however a part of a not-so-random stroll that may finally dwindle to present Bitcoin extra stability, and in the end, legitimacy,” the analysts wrote.