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In my entire 67 years on this planet, I’ve never seen a less bubble like asset than bitcoin. I’ve watched its price rise from less than a $1 to more than $16,000. That’s pretty impressive! Thus in January 2023, I would not expect gloating from people that “always knew” crypto was a bubble.

Over at the Financial Times, Martin Sandbu has this to say:

My colleague Jemima Kelly, who always saw the crypto bubble for what it was, writes on what the year in crypto taught us.

I’m certainly no fan of crypto. I’ve never invested in any cryptocurrency. I do not have any sort of expectations for the future path of crypto. But I am interested in bubbles, and the amazing tendency of people to see bubbles where they clearly do not exist.

Just for the fun of it, I googled Jemina Kelly and crypto bubbles, and came up with a Reuters article that she wrote in August 2017:

The price of a single bitcoin hit an all-time high of above $3,500 this week, dragging up the value of hundreds of newer, smaller digital rivals in its wake. Now some investors fear a giant crypto-bubble may be about to burst.

[To be clear, that’s the view of “some investors”, not necessarily Kelly.]

But what exactly does Martin Sandbu mean when he suggests that Kelly “always saw” that crypto was a bubble? Does he mean that she saw that bitcoin was a bubble way back in 2017, when the price was $3500? As of today, it’s $16,815.

Again, I could care less what anyone thinks of any particular investment. We all have opinions. I’m certainly no expert on forecasting asset prices. What interests me is the persistent attraction that people have to the idea of bubbles. An attraction so powerful that an example where bubble warnings were made at $3500 and the price later rose to $16,815 is seemingly viewed as confirming the earlier bubble warning.

Amazing.

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