This May Be Bitcoin's Moment of Truth

Bitcoin has had a terrific year overall, thanks to a small but dedicated set of believers in the disruptive power of cryptocurrencies who have also enabled many other individual investors to participate in the eye-popping phenomenon. Yet after bitcoin's value fell by more than a third in just a few days last week, and as exchanges struggle to cope with all the investor activity, the market finds itself at an important juncture -- perhaps even a defining one. Either this sharp price correction will act as a catalyst for expanding what, until now, has been quite limited institutional involvement in this market -- or it will become a stage in the deflation of a remarkable and historic asset bubble.

Bitcoin hit several milestones as it surged from around $1,000 at the beginning of the year to a record of nearly $20,000 last week -- from the introduction of bitcoin futures trading on the CBOE and CME to the emergence of specialized investment products. Most importantly, these events fueled a growing appreciation of the potential of blockchain technology, the innovation underlying bitcoin.