bitcoin investment mania money in your twenties

Bitcoin and Bubbles

One year ago we posted the article “Bitcoin Mania” and asserted that “Bitcoin is a bubble.”  While bitcoin tripled in one month, we predicted it would ultimately lose between 50-90% of its value.  

Since that tumultuous time, Bitcoin has plummeted 80%. 

Bitcoin was, indeed, a bubble.  As Investopedia explains “A bubble is an economic cycle characterized by rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive selloff occurs, causing the bubble to deflate.” 

As Ben Franklin once said “those things that hurt, instruct.”  If you are one of the many who sent money to Coinbase to purchase Bitcoin, then you have learned the hard way to avoid following the exuberant crowd. 

If you felt the urge to participate and resisted, then congratulations.  Bubbles are not rare, and you are prepared. 

Read Kristen’s first article on Bitcoin Mania here.

Kristen Jacks is the Founder of Money in Your Twenties.  Click here to view Kristen Jacks’ bio.