Why Bitcoin Is Plunging (This Time)
The price of bitcoin dropped another 10 percent Tuesday, extending a decline that has sent the virtual currency down 33 percent in the past month and 46 percent in the past year.
Boom and bust cycles are par for the course for bitcoin. So far this year, there have been only three days where the S&P 500-stock index dropped more than 3 percent, with the worst being a 4 percent drop in February, says Duke University finance professor Campbell R. Harvey. “In contrast, there are seven days where bitcoin dropped more than 10 percent with the worst being 16 percent, also in February. Just for perspective, the 16 percent is the equivalent to a plunge in the Dow of 4,000 points—that would get some attention.”
"When you've got something with a historical track record of extreme volatility, that's what you should expect," Harvey says.
