Noah Smith, Columnist

Start Worrying When Investors Borrow to Buy Bitcoins

If the cryptocurrency crashes, big deal. But if speculators went into debt, look out.

December 20, 2017 at 10:00 AM UTC

Noah Smith is a former Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

Debt is the problem.
Photographer: Frank Scherschel/LIFE Picture Collection/Getty Images

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A financial mania is an amazing thing to experience. The crash of 2008 sent a chill through the American financial system, making it seem like the psychic scars might prevent another asset-buying frenzy for decades. But then a new force appeared from outside the financial system entirely, and the heady days of price charts and bubble talk are back.

That force is bitcoin. The cryptocurrency has appreciated spectacularly since the beginning of the year: