Bitcoin Crypto Featured
By PrimeXBT Analyst
In 2013, only four short years following the advent of the first ever cryptocurrency, Nout Wellink, former president of the Dutch Central Bank, described Bitcoin as “worse” than “tulip mania,” referencing what is considered to be the first record of a speculative bubble in human history.
“At least then you got a tulip, now you get nothing,” Wellick added.Little did he know, the asset back then worth under $15 per BTC at the time, would go on to be worth $20,000 and become a global phenomenon.
With Bitcoin now a household name, and even added to the de-facto dictionary by Merriam- Webster, can the comparison with tulip mania finally come to an end? Why Bitcoin Comparison With Tulip Mania Has Come To An End
A PrimeXBT analyst has revealed why the historical comparison exists in the first place, and the many reasons why the frequently referenced statement should be put to rest for good.
Remembering Tulip Mania And The First Speculative Bubble Burst Tulipmania hasn’t only been compared to Bitcoin.It was also used to draw a comparison to the Dot Com bubble back in the early days of the internet.
The reference is a nod to surging tulip prices that swept The Netherlands in 1636 and the resulting bubble pop and economic collapse that ensued.
Speculation over early futures contracts for the sought after flowers ballooned in value.No actual tulips were even traded, and no contracts were ever delivered due to the entire market collapsing in February 1637.Coincidentally, the market began to collapse alongside the start of a major pandemic outbreak – the bubonic plague.
The Many Parallels Between Crypto and Tulips, Even A Pandemic The parallels between tulip mania and Bitcoin are strikingly similar.It was the debut of new futures contracts that brought Bitcoin mania to full throttle.Following their release, the cryptocurrency collapsed to a shocking low the following February – some 380 years later.
Now a widespread virus outbreak now is causing economic distress.The major difference here is that Bitcoin continues to rise from its ashes again and again like a Phoenix, while tulips were left in the ground where they belong.
Instead of the “nothing” Nout Wellink was referencing that each Bitcoin gets you, people now view the cryptocurrency as a sovereign store of value and borderless means of transfer.
All of this is possible without the requirement of a third party or intermediary like the Central Bank Wellink worked at.
Unlike tulips that can be grown and grown to a farmer’s desire, only 21 million BTC will ever exist.And the asset’s halving – an event that reduces supply even further – just passed recently.
All signs point to Bitcoin being something far more special than tulips.Why Bitcoin’s Bubble Burst Isn’t Comparable To Tulips
When Bitcoin’s speculative bubble burst, it’s valuation plummeted by over 80%.
An 80% drawdown in hindsight isn’t that enormous following an over 9,000% climb in price.After the initial collapse, a bear market followed that when combined with the asset’s notorious volatility, wiped out investor’s wealth, just like tulips did to Dutch investors in the early 1600s.
But with today’s technology, trading platforms enabled traders to open short Bitcoin contracts aiming to profit from the downtrend.Trading, rather than simply holding, became the ideal way to get more Bitcoin over the last several years.
Bitcoin’s next bull market may be soon, and another speculative bubble is possible that could take the asset to as high as $1 million per BTC, according to some expert Bitcoin price predictions .
Unlike tulips, Bitcoin is showing its long term value as a currency, store of value, and asset for traders rife with opportunity and volatility.
A pandemic is slowing down the asset’s recent growth, much like tulips faced with the bubonic plague, but Bitcoin existing on the internet makes it a contactless payment traders can access from anywhere, at any time.Trade Bitcoin-Based Contracts And More At PrimeXBT Bitcoin interest is growing again, and it has attracted the likes of billionaire hedge fund manager Paul Tudor Jones, who has compared the asset to gold in the 1970s.
Although there are many comparisons to the Golden Age of the Dutch, there are more comparisons to draw between Bitcoin and gold itself.Each share many similarities and have been heralded as a hedge against coming inflation.
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