Bloomberg analyst Eric Balchunas has made a compelling case against the comparisons between Bitcoin and the infamous Dutch tulip mania of the 1630s. In his analysis, he emphasizes Bitcoin”s remarkable 17-year history of recoveries, underscoring its resilience as an enduring asset class.
In a recent social media post dated December 6, Balchunas highlighted that Bitcoin is up approximately 250% over the past three years and has gained 122% in 2024, despite experiencing a 27% pullback from its October peak. He noted, “Tulips rose and collapsed in a few years, punched once and knocked out. Bitcoin has come back from multiple massive shocks to reach new highs and has survived 17 years.”
Balchunas, who specializes in tracking spot Bitcoin exchange-traded funds (ETFs), pointed to the cryptocurrency”s ability to withstand significant market events, including exchange hacks, banking crises, the downturn of initial coin offerings in 2018, pandemic-related volatility, and notable project failures.
As of early December, Bitcoin ETFs held a substantial amount of assets, which has been bolstered by institutional participation during downturns, providing a safety net for the market. Balchunas argues that non-productive assets, which do not generate income, can still hold value based on scarcity and demand dynamics. “Bitcoin and tulips are both non-productive assets. But so is gold, so is a Picasso painting, rare stamps — would you compare those to tulips? Not all assets have to be productive to be valuable,” he stated.
Furthermore, Balchunas indicated that the recent declines in Bitcoin”s price are typical corrections rather than indicators of a systemic collapse. He explained that the cryptocurrency”s decline merely represents a normalization from prior excesses. “If you think about Bitcoin”s year, all that really happened up to that point is it gave up the extreme excess of the prior year,” he stated.
The market capitalization of gold, which also lacks yield production, demonstrates how value can be maintained through historical acceptance and scarcity. Advocates of Bitcoin argue that it serves a similar purpose, with added benefits in remittances and corporate treasury functions.
According to blockchain data, the upcoming Bitcoin halving event will reduce new issuance, tightening supply even further, while demand from ETFs continues to rise. On-chain metrics reveal significant accumulation by larger holders during recent price declines, with a considerable portion of Bitcoin“s supply remaining untouched for over 12 months. Market valuation metrics such as the MVRV Z-Score indicate periods of undervaluation compared to historical bull market triggers.
Unlike the tulip mania, which lasted only three years and ended in a dramatic price collapse, Bitcoin has weathered numerous boom-and-bust cycles, consistently establishing new price highs after each downturn. Balchunas concluded that the market”s focus on short-term price movements is misplaced, suggesting that consolidation periods are a normal part of long-term investment cycles.
