RATE Group | Bitcoin’s bust is a reminder to be wary
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Bitcoin’s bust is a reminder to be wary

21 Jul Bitcoin’s bust is a reminder to be wary

Posted at 13:54h in Bitcoin News by

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A depiction of the cryptocurrency Bitcoin

Recently, the Bitcoin price dropped below $6,000. It was just shy of $18,000 in the run-up to Christmas!

If Bitcoin were a smidgeon as important to the global economy as its fans claim it might be someday, this plunge would be an event of 1929 proportions.

However, in the short history of the Bitcoin price, it’s merely a major wobble.

Bitcoin’s price has often soared and cratered. In the early years, it rose by many multiples several times before crashing faster than you could say: “What’s the price of Bitcoin divided by 10?”

Such volatility isn’t surprising when an asset that’s impossible to value using cash flow-based methods becomes the centre of a global bidding mania.

The wrong type of fool

Economists would say that attempts to profit from these sorts of assets are an example of the greater fool theory. You buy planning to find an even bigger fool to sell to at a higher price.

It’s not a flattering description. It’s also a niggle for us at The Motley Fool, given greater fool theory…

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