Are crypto assets a bubble?

Crypto assets are a bubble.

Crypto assets have the characterstic price behaviour that resembles many other bubbles and market manias throughout history. Bitcoin has been characterised as a speculative bubble by eight winners of the Nobel Prize in economics.

  • Paul Krugman
  • Robert J. Shiller
  • Joseph Stiglitz
  • Richard Thaler
  • James Heckman
  • Thomas Sargent
  • Angus Deaton
  • Oliver Hart

And by central bank officials:

  • Alan Greenspan
  • Agustín Carstens
  • Vítor Constâncio
  • Nout Wellink
  • Mark Carney

And several notable investors have also described it as a bubble:

  • Warren Buffet
  • George Soros

References

  1. Chancellor, Edward. 1999. ‘Devil Take the Hindmost: A History of Financial Speculation’.
  2. Blanchard, Olivier J, and Mark W Watson. 1982. ‘Bubbles, Rational Expectations and Financial Markets’. NBER Working Paper, no. w0945.
  3. Bernstein, William J. 2021. The Delusions of Crowds: Why People Go Mad in Groups. Grove Press.
  4. Demmler, Michael, and Amilcar Orlian Fernández Domínguez. 2021. ‘Bitcoin and the South Sea Company: A Comparative Analysis’. Revista Finanzas y Política Económica 13 (1): 197–224.
  5. Baur, Dirk G., and Thomas Dimpfl. 2021. ‘The Volatility of Bitcoin and Its Role as a Medium of Exchange and a Store of Value’. Empirical Economics 61 (5): 2663–83. https://doi.org/10.1007/s00181-020-01990-5.
  6. Caferra, Rocco, Gabriele Tedeschi, and Andrea Morone. 2021. ‘Bitcoin: Bubble That Bursts or Gold That Glitters?’ Economics Letters 205: 109942. https://doi.org/10.1016/j.econlet.2021.109942.
  7. Mackay, Charles. 2012. Extraordinary Popular Delusions and the Madness of Crowds. Simon and Schuster.
  8. Nabilou, Hossein, and André Prüm. 2019. ‘Ignorance, Debt, and Cryptocurrencies: The Old and the New in the Law and Economics of Concurrent Currencies’. Journal of Financial Regulation 5 (1): 29–63. https://doi.org/10.1093/jfr/fjz002.
  9. Smales, L. A. 2022. ‘Investor Attention in Cryptocurrency Markets’. International Review of Financial Analysis 79: 101972. https://doi.org/10.1016/j.irfa.2021.101972.
  10. Kolchinski, Alex. 2022. ‘Crypto Is an Unproductive Bubble’. Alex Kolchinski (blog). 18 March 2022. https://alexkolchinski.com/2022/03/18/crypto-is-an-unproductive-bubble/.
  11. Krugman, Paul. 2021. ‘The Brutal Truth About Bitcoin’. The New York Times 21.
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