Economist: If Bitcoin is a Bubble, Final Stage of ‘Panic’ on the Horizon

Tulip mania was a period in the Dutch Golden Age during which contract prices for bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels before dramatically collapsing in February 1637. Some skeptics consider Bitcoin to be the tulip bubble of the 21st century, but it’s really not so simple.

Bitcoin: Bubble or New Global Currency?

Let’s consider the theory of Hyman Minsky, the U.S. economist whose theories on financial fragility were highlighted during the 2008 collapse of the housing market. According to Market Watch, he believed that an asset bubble has five stages: displacement, boom, euphoria, profit-taking, and panic.

Under this framework, policy adviser at the Federal Reserve Bank of San Francisco, Joost van der Burgt, says that if Bitcoin is in fact a bubble, it’s likely at the beginning of the ‘profit-taking’ stage, meaning that ‘panic’ is not here yet, but is coming.

Looking back, according to van der Burgt, the…