Investors in Bitcoin are learning the old truth - "What goes up, must come down".
A digital asset that has no income stream is very hard to value. That makes it hard to designate a price target on the way up, but also hard to set a floor on the way down.
The price of the cryptocurrency peaked last month at somewhere over $19,000 but, at the time of this article, some exchanges now show a price below $10,000.
This article provides an interesting insight on the rise and fall of Bitcoin...
Perhaps the best way of understanding Bitcoin is through a model of how bubbles operate. The classic model, developed by Hyman Minsky and elaborated by Charles Kindleberger, a historian who studied bubbles, has five stages: displacement, boom, euphoria, financial distress and revulsion. The displacement is some technological development that can be used to justify a “new era”—railways, canals, the internet or blockchain. A boom then occurs and drags in more and more investors; at some stage, we reach euphoria, where the boom is widely known to the public and there is talk about those who made millions from the trade. This stage had been reached in November, when there were adverts for cryptocurrencies on the train and discussions on popular radio programmes.