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Aaron Brown

Will Bitcoin Crash Again? Next Price Cycle Could Be Tamer Ride

The digital currency market is much different from the last two boom-and-bust streaks.

Volatility won't disappear, but it doesn't have to be seismic, either.

Volatility won't disappear, but it doesn't have to be seismic, either.

Photographer: Chritophe Morin/Bloomberg

The cryptocurrency market is one of booms and busts. Bitcoin went from essentially zero in 2009 to almost $150 by 2013. It then fell 60% and rebounded to $1,150. By 2015, it was down 85% to $175 (although still above the high in 2013). It then skyrocketed, peaking at more than $20,000 by the end of 2017. In 2018, it again lost 85% of its value to $3,200 (but still above the 2015 high). This year, Bitcoin rose to more than $9,000 and now hovers around $8,100.

If the pattern of the last two rallies repeats, Bitcoin could rise to $60,000 to $400,000 before crashing 85% again. But today’s cryptomarket is far different from the ones in 2013 and 2015, when the last two rallies started. It’s much larger for one thing, $260 billion in market cap compared with $1 billion in 2013 and $3 billion in 2015. There are far more cryptoassets and far more users. More than $30 billion of investment capital was spent in 2018 building platforms and code bases. The regulatory picture has clarified considerably, and big companies including JPMorgan Chase & Co. and Facebook Inc. are jumping into the sector. (Full disclosure: I own Bitcoin and other cryptocurrencies.)