Opinion: In absence of intrinsic value, bitcoin’s price could be anything or nothing

NEW YORK (Project Syndicate) – On February 8, Elon Musk’s electric car company Tesla TSLA, -2.20%, announced that it had invested $ 1.5 billion of its cash reserves in bitcoin in January. The news helped boost the already skyrocketing price of the BTCUSD cryptocurrency, + 0.30% by a further 10%, to a record high of over $ 44,000. But, especially in the case of bitcoin, what goes up can easily collapse.

Bitcoin was invented in 2008 and started trading in 2009. In 2010, the value of a single bitcoin increased from from about eight cents to 8 cents. In April 2011, it was trading at 67 cents, before subsequently climbing to $ 327 by November 2015. As of March 20 last year, bitcoin was trading at around $ 6,200, but since then its price has increased by more than seven times.

Today, bitcoin is a perfect 12-year bubble. I once described gold GC00, -1.50% as “brilliant bitcoin”, and characterized the price of the metal as a 6,000-year bubble. It was a little unfair to gold, which had intrinsic value as an industrial commodity (now largely redundant), and yet …

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