December 7, 2017 / 10:20 PM / a year ago

Breakingviews - Bitcoin looks like speeded-up unicorn hype

A Bitcoin (virtual currency) paper wallet with QR codes and coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014. REUTERS/Benoit Tessier

NEW YORK (Reuters Breakingviews) - Bitcoin’s meteoric rise is looking like speeded-up unicorn hype. A sheen of futurism, fear of missing out, a lack of fundamental value, and an inability of big backers to sell without crashing the market are factors pumping up the digital currency’s price.

The rise in value has been astonishing, from $8.74 when Breakingviews first wrote on bitcoin in 2011, to over $15,500 on Thursday morning. The trajectory has gone exponential in recent days, with the price surging by more than 20 percent in the past 24 hours.

It’s a much more rapid version of what happens with hot technology startups. Funding rounds ratchet the valuations higher and higher, with only increasing investor demand, the previous valuation and a distant promise of huge potential to guide them. That’s how Theranos, the upstart blood-testing firm, got to its peak valuation of $9 billion. Whereas bitcoin, in enthusiasts’ minds, will replace the dollar, Elizabeth Holmes’ brainchild was going to replace every unpleasant, cumbersome blood test with a single finger-prick.

The Theranos technology didn’t work, and its evaluation evaporated. Meanwhile, bitcoin’s continued buoyancy in fact undermines any potential usefulness. Holders have a hard time psychologically using their coins to purchase anything. In 2010, a software developer famously bought two pizzas for 10,000 bitcoins. Nobody wants to be the guy who paid over $150 million for lunch.

Crypto-currencies are, however, excellent vehicles for speculation. They have no objective value, so – like a startup – their worth is derived from the narrative of what has, so far, been a steadily rising chart. Demand is swamping supply. The value of all bitcoins is a bit over $250 billion, and volume hit a record $28 billion or so over the past 24 hours, according to The similarly sized SPDR S&P 500 ETF trades multiples of this on a typical day. The exchange-traded fund’s relatively small moves in value indicate much more balanced trading.

Big holders of bitcoin can’t, therefore, sell in any size without the risk of tanking the price – which could kill the momentum for good. They might want to think about doing so, though, to make sure they don’t get caught out by a rush for the door. The danger if bitcoin’s credibility is punctured is an accelerated, Theranos-like bloodbath.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below