1. Bitcoins already underwent several corrections (last one only a few days ago). These small "crashes" later resulted in longer, more stable phases. These substantial downturns flush out most bubble activity. (Bubbles usually go up until they burst. Bitcoin is generally all over the place. Very un-bubble like. When a bubble crashes, it's pretty much done for. When Bitcoin crashes, it's two weeks of wild swings and then soften on a new baseline.)
2. Bitcoin is an erratically growing commodity / currency. If Bitcoin succeeds long-term, then it's hopelessly undervalued currently (just because of the limited supply). If not, it's not worth anything. Basically it has a high risk associated with it and no safety net or more traditional baseline measure you could work with. This inevitably results in erratic price swings no matter what you do. For instance, the current price is mostly due to China getting into the game. There are still many other countries that are not even on the playing field. No financial instrument could prepare you if the demand rises because another big interest wave comes (like India) and the price needs to find a new equilibrium a magnitude higher.
Considering that Bitcoin got a value increase of 24543% in the past 2 Years, it's course corrections are outright tame.
"When a bubble crashes, it's pretty much done for."
I don't remember the dot com crash being quite as dramatic as that - the NASDAQ peaked in March 2000 dropped down in May and regained about 50% of the losses by July before dropping and climbing to the July level again in October before really dropping.
Edit: Graphs of Bitcoin/USD remind me of the description of start-up business plans from Cryptonomicon "conveniently summarized by graphs that all seem to be exponential curves screaming heavenward". :-)
I guess my point was that rather than have Bitcoin grow 3x within a month because of some big news, then crash to 2x of its height, and then grow back "slowly" to where it was within another 1-3 months, it could just grow more smoothly to begin with, and even if there were some big news in a row, there could be a lot of people betting against it and having it grow perhaps only 50 percent overall that month, and then another 50 percent the next month, or whatever.
1. Bitcoins already underwent several corrections (last one only a few days ago). These small "crashes" later resulted in longer, more stable phases. These substantial downturns flush out most bubble activity. (Bubbles usually go up until they burst. Bitcoin is generally all over the place. Very un-bubble like. When a bubble crashes, it's pretty much done for. When Bitcoin crashes, it's two weeks of wild swings and then soften on a new baseline.)
2. Bitcoin is an erratically growing commodity / currency. If Bitcoin succeeds long-term, then it's hopelessly undervalued currently (just because of the limited supply). If not, it's not worth anything. Basically it has a high risk associated with it and no safety net or more traditional baseline measure you could work with. This inevitably results in erratic price swings no matter what you do. For instance, the current price is mostly due to China getting into the game. There are still many other countries that are not even on the playing field. No financial instrument could prepare you if the demand rises because another big interest wave comes (like India) and the price needs to find a new equilibrium a magnitude higher.
Considering that Bitcoin got a value increase of 24543% in the past 2 Years, it's course corrections are outright tame.