Bitcoin Is the Most Obvious Bubble of the Modern Era. ⇒

   12 December 2017, early evening

There is another important feature of the bitcoin market that could both explain its high valuation and suggest an imminent correction. The crypto market is insanely concentrated. Approximately 1,000 people own 40 percent of all bitcoin in circulation, according to Bloomberg. Just 100 accounts control 17 percent of the market. Many of these accounts have held bitcoin for years because they believe fervently in its value. But if a handful of them sell even a small portion of their shares, it could dramatically move bitcoin’s price, potentially triggering a massive correction, as retail investors (who only bought in because the price was going up) try to sell en masse to avoid losing all of their money. There is an upside to this concentration, however, which is minimal contagion effects. If the bitcoin bubble crashes, it likely won’t spill out into the general economy, like the subprime mortgage crisis did one decade ago.

This article is fascinating. A few of my coworkers are crushing hard on Bitcoin right now. I still think it’s really stupid. I just can’t get over that feeling.

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