Could bitcoin be the biggest market bubble in history? According to financial research firm Birinyi Associates, the answer is a resounding yes.
A Close Comparison
As a comparison, Birinyi studied 10 other famous market bubbles in history. This included the Mississippi bubble in the early 18th century, the rise of the South Sea Company in the same period, the 1929 stock market, the silver rush both at the end of the 1970s and at the end of the 2000s, the Japanese stock market rise in the late 1980s, the beanie babies craze of the mid-1990s, the Qualcomm bubble of the late 1990s, and the oil boom of the mid-2000s.
They say that bitcoin is the biggest bubble based on how dramatically the digital currency has risen in the past few years. For comparisons, Birinyi used the peak of each bubble as the end point, with the starting point being (when possible) 22 months earlier, so as to match bitcoin’s price from January 2016.
To demonstrate just how fast the price of bitcoin is rising, Birinyi says that in just one week bitcoin has gone from the 3rd largest market bubble in history to the first.
It should be noted, though, that the firm didn’t compare bitcoin to what many consider is the biggest bubble in history: the Dutch tulip market in the 17th century. They didn’t compare the two because of what they say is the lack of reliable metrics of the tulip phenomenon. But analysts at Convoy Investments insist that the bitcoin bubble is certainly larger than the tulip one. They make that claim based on the fact that bitcoin has gone up 17 times over the last year and 64 times over the last three, which they say exceeds the rise of tulip prices over the same period.
Maybe Not a Bubble
However, not everyone see Bitcoin’s rise as a bubble.
Former hedge fund manager Michael Novogratz, who’s now CEO of Galaxy Investment Partners, thinks that bitcoin will rise to $40,000 in the coming months. He also said that his company will soon be launching its own cryptocurrency fund. And Novogratz isn’t only person on Wall Street bullish on bitcoin.
Recently, three major exchanges have either launched bitcoin products, or plan to launch them soon. Last Sunday bitcoin futures began trading at the Chicago Board Options Exchange, and bitcoin futures will begin trading at the Chicago Mercantile Exchange this weekend. NASDAQ will also begin trading bitcoin futures next year.