As usual, assets have been dominated by the speculators, the prices will be pushed too high compares to the real value and became bubbles in two cases: The price flared up once, then the asset disappeared forever (like the 17th-century tulip bubble) or a boom-and-bust cycle that lasted for many years (like gold).
For the case of Bitcoin, the digital currency has experienced three times of 80% price falling even it has survived in just 10 years.
Last week, Bitcoin’s price crossed the $ 40,000 mark to set an all-time high but has dropped more than 15% since then.
Man Group, the world’s largest hedge fund, has compared Bitcoin to Greek mythology character Prometheus – the god who was punished by Zeus by forcing him onto a rock so that the eagle would eat his liver every day. But the liver, when eaten during the day, regenerates at night.
“Every time the Bitcoin bubble burst, then Bitcoin did not disappear, but another wave of price increases appeared. This phenomenon repeats, making Bitcoin very different from bubbles in history.”
Instead of considering Bitcoin’s bulls and falls as discrete bubbles, it would make more sense to consider the volatility as simply part of the discovery of a new property, according to Man Group analysts. It is not a bubble, but part of the “random moves” that will ultimately bring Bitcoin orthodoxy and stability.
Here’s a table of some financial bubbles compiled by Man Group.