I used to be a bitcoin bull—here’s why that changed

(credit: Zach Copley)

I used to be a bitcoin bull. As bitcoin's price soared from $13 to more than $1,000 in 2013, lots of people argued it was an unsustainable bubble. I argued the opposite: that bitcoin's price still had a lot of room to rise. And obviously, I turned out to be right, as bitcoin is now worth $17,000-17 times the cryptocurrency's previous peak in late 2013.

Now we're in the midst of another big bitcoin bull market, and I'm much more worried that the market is getting into unsustainable territory. At the beginning of the year, bitcoins were worth $1,000 apiece, and all bitcoins in circulation were worth around $15 billion-still quite small as global financial assets go. Today, each bitcoin is worth $17,000, and all bitcoins in circulation are worth a much more substantial $280 billion. That seems like a lot for a payment network that only processes about four transactions per second.

Meanwhile, there are growing signs that ordinary, unsophisticated investors may be getting in over their heads. Anecdotal reports suggest that people with no real technical or financial expertise are getting interested in cryptocurrency, and some people are even borrowing money to invest in bitcoin. The market is starting to feel like the final month of the dotcom boom, when people started getting tech stock tips from their taxi drivers.

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