Commentary: Crash Reflections

The 5th Bitcoin Crash has come, and has gone. Fueled by media, the price rose to 266 on Mt. Gox before tumbling to $54.25 over a particularly brutal 36 or so hours. Many of you might have noticed that while others cheered Bitcoin on higher and higher each day, I spoke instead of fear for the crash to come. No asset, outside of extreme catastrophe, should rise that quickly and hold it’s value and continue to rise. Good economics doesn’t allow it. Trust me, I was trained by the best. Also see the disclaimer.

As bad as recent events have been for our brothers and sisters in Cyprus, extreme catastrophe might be a bit of a stretch. Certainly, for some particularly large investors, the events were unbearable.  But, all things in perspective the EU could have actually botched the job worse by their original plan of turning a blind eye while the Cypriot government seized from all accounts at all banks. Never the less, A bit of good old fashioned panic set in. Across the globe, those who bother to read the news placed their trust in a computer to secure (for most) a fraction of their liquid and some non liquid wealth. The price jumped higher

No, with most certainty this crash should have caught none by surprise. The previous lag issues with Mt. Gox. An asset gaining 600% value in a month. Massive media promotion for free. The new reality of the Euro in just one meeting. Without doubt, many of you who will read this have made great fortunes by selling at multiples of your buy-in price. This is good, very good as the end result of the last 45 days has been a vast distribution of Bitcoin between a greater number of holders. The press certainly has convinced many businesses that Bitcoin is worth exploring. Certainly a further plummet could still occur, but I have no doubt the highs for bitcoin will be later in the year.


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