Why investors needn’t fear bursting of bitcoin bubble

Its stratospheric price rise this year, shown in the chart below from Capital Economics, helps explain why there’s just so much interest at present.

Aside from speculation as to why prices have surged so far so fast, the other major talking point is whether bitcoin is a bubble, destined to pop like other asset bubbles such as tulip prices and tech stocks in the past.

While that debate is unlikely to be resolved in the near-term, to Andrew Kenningham, chief global economist at Capital Economics, even if bitcoin is in a bubble, its subsequent popping — should that actually eventuate — will have little ramifications for broader asset markets, the banking system or the global economy.

This chart from Capital Economics compares the current net value of Bitcoin compared to other more established asset markets.


Leave a Reply

Your email address will not be published. Required fields are marked *