This uncanny chart shows the Bitcoin bubble could be about to burst

Bitcoin’s exponential surge in the latter quarter of 2017 became one of the biggest stories of the year. However, if its current trajectory continues, it could become one of the biggest stories of 2018 for all the wrong reasons. After starting 2017 at around $900, the cryptocurrency broke the $11,000 barrier a mere 12 hours after hitting $10,000 at the end of November before rising to a peak in excess of $18,000 shortly afterwards. The number of Google searches for Bitcoin spiked as hype built, with volume for the week ending December 2 double that for the preceding seven-day period. Search interest peaked the week before Christmas. However, since then it hasn’t been plain sailing. A big drop in price in late December was followed by a recovery, but since the start of this year the price has fallen again. This is a make-or-break time for Bitcoin, the price of which has – so far – followed the trajectory of a classic asset bubble to an eerie degree. If it is a bub-ble, it is about to burst.

Arguments about whether Bitcoin is a bubble or the internet age’s answer to the Gold Rush have been bandied backwards and forwards in recent months. Based on Bitcoin’s price relative to the theoretical asset bubble curve, the answer is likely to come soon. If Bitcoin is a bubble, then we’re at the beginning of the blow-off phase when investors will start to panic and the value of the cryptocurrency will plummet. Given signs that China may be about to clamp down on its Bitcoin mining businesses, it would be a brave person to invest in the cryptocurrency at the present time. If Bitcoin does manage to hold stable in the coming weeks, however, then it could well be here to stay for the foreseeable future.

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