It’s hard for any rational human to look at this chart, and not conclude that Bitcoin is on an utterly parabolic rise, fuelled by greed, speculation, and fascination, while being completely divorced from any “fundamentals.”
We have no idea when the music will stop (it could go to $500 or $1000!) but at some point there will be a moment when it ends in tears, and people will wonder why they paid 40% more for something than what it was selling at the day before.
Here’s what’s really fascinating and unique about the Bitcoin boom.
This isn’t the first time we’ve seen a bubble in something in a privately created thing that’s off traditional financial markets.
For example, in the early 2000s, there was a legitimate bubble in the stuffed animals called Beanie Babies. It’s not clear why suddenly people started paying through the nose through them, and why whole industries were created around them, but it happened, and then they died.
In the 90s there was something of a baseball card bubble.
Bitcoin is somewhere in the middle: A privately created financial instrument.
But what sets Bitcoin apart is the real-time data on it.
You can go here and watch Bitcoin trade tick-by-tick, which is not something you could ever do with these other unconventional micro-bubbles.
Meanwhile, the Bitcoin advocates (like all bubble apologists) have great stories (this is a response to Cyprus and wild central banks!) but in reality that’s just an excuse. This is a fascination that people have, and the market is incredibly tiny, so it doesn’t take too many new people wanting to dabble to make the price go nuts. That’s all.
And it’s enjoyable watching it in real time.
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