The bitcoin price is trading fractionally lower as the relief rally that was in place on Monday begins to fade. It has been able to maintain the $6,200 level. Fundstrat’s Robert Sluymer pointed out that the “15 [day moving averages] remain intact and will have to be reversed to signal the beginning of any meaningful improvement.”
Another Robert, Nobel prize winner Robert Shiller, has also been studying the bitcoin price, and he has come to some conclusions. Shiller has been remarkably open-minded about the role of cryptocurrencies in the global economy compared to his economist peers. Most recently, Shiller observed two characteristics of bitcoin fever, telling Bloomberg that it’s both “generational and geographic.”
In the United States, Shiller said that demand is more robust on the West Coast than it is on the East Coast:
“Silicon Valley is really into it. This to me shows that this is not a rational response to new information. It’s a social movement, it’s an epidemic of enthusiasm. It is a speculative bubble,” Shiller said.
He was quick to note, however, that despite being a bubble, that doesn’t mean the bitcoin price will fall to zero, as “speculative bubbles recur.” He pointed to the bitcoin bubble of 2013 in which the BTC price “looked like it was done” after plummeting from $1,000 to $200. A similar scenario is unfolding now, as evidenced by the bitcoin price in 2017 climbing as high as nearly $20,000 — more than three times where it’s currently trading.
Between the Lines
If you listen between the lines to what Shiller is saying, he almost sounds like he is on board with bitcoin and other cryptocurrencies. When the Bloomberg host asked him to equate bitcoin to tulip mania, Shiller quipped that tulips are still valued, adding that there are some pricey tulips out there. He does concede that in some fundamental sense there is a parallel to tulips but maintains that even so, don’t expect the bitcoin price to evaporate.
“I think of bitcoin as a remarkable social phenomenon. There’s also some impressive crypto-graphic theory that’s coming out of computer scientists,” Shiller said, adding that what sets bitcoin apart from other exciting technology is the “possibility of getting rich over this.”
For Shiller to defend bitcoin as a concept is a far cry from others in economist circles who insist that bitcoin should be illegal. Shiller has increasingly taken a ‘cooler heads prevail’ approach to the competing decentralized currency. Perhaps there is another Nobel prize in Economic Sciences in his future after all.