Bitcoins Are Tanking Today

Bitcoins opened today at $226.04. As I write this, they are now trading at about $178. So they have lost about 25% of their value today, and its only 1PM EST.

Here’s a chart of what’s happened today.

coindesk-bpi-chart

Over the last month, bitcoins have lost nearly half their value. Bitcoins were trading at about $350 on December 15.

Here’s a chart of what’s happened over the last month.

coindesk-bpi-chart-1Last April, I wrote a post asking why bitcoins aren’t a bubble. Some people, including me, didn’t take that post too seriously, but I still don’t understand why bitcoins are worth anything. I seem to have more company now.

PS I have been spending a lot of time over the last 10 days thinking about the 1920-21 depression. I hope to post something later today or tomorrow on that topic.

5 Responses to “Bitcoins Are Tanking Today”


  1. 1 W. Peden January 14, 2015 at 12:55 pm

    Volatility always cuts both ways.

    Do Bitcoins perhaps have some value beyond their speculative value and their limited use in online transctions due to some people valuing their USP?

  2. 2 W. Peden January 14, 2015 at 12:55 pm

    Though just after I post that, suddenly all the other crypto-“currencies” come to mind!

  3. 3 Benjamin Cole January 14, 2015 at 11:18 pm

    What are bitcoins, anyway?

  4. 4 John S January 15, 2015 at 9:45 am

    The problem isn’t cryptocurrency per se, it’s the mining-based (aka proof-of-work) method of ledger verification. I’ve read that the annual costs of mining run upwards of $500 million/year. Obviously, without a huge increase in the number of real world, fee-generating transactions (e.g. people buying coffee with bitcoins), a continuous rise in the price of bitcoin is unsustainable. As the price falls, miners who speculatively hoarded their mined coins will either sell off them off to pay their operating costs or just exit bitcoin altogether.

    [ Shameless tooting of my own horn, but I’ve felt this way about bitcoin for quite some time.
    http://jpkoning.blogspot.com/2014/11/gilded-cage.html?showComment=1415537918159#c6149436424917197614 ]

    Interestingly, six of the top ten cryptocoins (measured by market cap) are not mineable, and the three major mined coins are on their way down (Bitcoin, Litecoin, and Dogecoin). So the real test will be whether a cryptocurrency with a low cost ledger verification method (e.g. Ripple’s consensus model) will survive. The jury is still out on that one.

  5. 5 David Glasner January 18, 2015 at 9:26 am

    W., It’s possible that bitcoins do have provide some real service flow that creates a value independent of its use in exchange, that’s why I don’t feel confident in saying flatly that they are a bubble. I am just guessing that they are.

    Benjamin, Just do a Google search and you can find out.

    John, Excellent point, you needn’t apologize.


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About Me

David Glasner
Washington, DC

I am an economist in the Washington DC area. My research and writing has been mostly on monetary economics and policy and the history of economics. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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