Regulation of Bitcoin will induce a bubble burst

The massive popularity of Bitcoin and the massive investment boom in it and other cryptocurrencies, notably by less sophisticated investors, is attracting considerable attention from government and financial regulators. It is this which will eventually lead to Bitcoin’s downfall and the end of the cryptocurrency bubble.

In the space of a year, Bitcoin’s value has grown more than 13-fold, and in that time it has experienced massive volatility, rising and falling in value by 20% or more in a single day. That volatility appears to have only been magnified by the launching of Bitcoin futures in December 2017.

That rising volatility has sparked considerable concern among regulators, particularly as inexperienced retail investors caught up in the hype surrounding Bitcoin are mortgaging their homes and obtaining lines of credit to invest.

Once Bitcoin is regulated, much of the attraction stemming from its decentralized nature as well as independence from governments, central banks, fiat currencies, and the traditional banking monopoly will evaporate. That, along with its lack of utility, inability to be objectively valued, and failure to become a widely accepted currency, will bring the bubble to a sharp and savage end.