Bloomberg’s Eric Balchunas refutes the Bitcoin-tulip comparisons, citing a 17-year recovery, demand for ETFs and halving-induced scarcity as evidence of enduring asset value.
Summary
- Eric Balchunas notes that Bitcoin is still up about 250% in three years and 122% in 2024, despite a 27% decline from October highs.
- He argues that non-productive assets like Bitcoin, gold, art, and rare stamps maintain value through scarcity and demand, unlike the short-lived tulip bubble of the 1730s.
- Halving-induced supply declines, ETF accumulation and on-chain bond holding data suggest that corrections are normal consolidation, not a systemic collapse.
Bloomberg ETF analyst Eric Balchunas has disputed comparisons between Bitcoin and the Dutch tulip mania of 1637, citing the cryptocurrency’s 17-year survival and multiple recoveries as evidence of its durability as an asset class.
In a social media post on December 6, said Balchunas noted that Bitcoin continues to rise about 250% in three years and is up 122% in 2024, despite a recent decline of about 27% from its October high.
“Tulips rose and collapsed within a few years, struck once and then shut down. Bitcoin has bounced back from multiple massive shocks to reach new highs and survived for 17 years,” Balchunas wrote, according to his public statements.
The analyst, who tracks Bitcoin exchange-traded funds, pointed to the cryptocurrency’s resilience through major market events, including stock market hacks, banking crises, the downturn of 2018’s first coins, pandemic volatility and high-profile project failures.
According to industry data, Bitcoin ETFs had significant assets under management as of early December, with institutional participation providing support during market downturns.
Balchunas argued that non-productive assets can retain value without generating income or dividends. “Bitcoin and tulips are both non-productive assets. But so is gold, a Picasso painting and rare stamps. Would you compare those to tulips? Not all assets have to be productive to be valuable,” he stated.
The analyst noted that Bitcoin’s recent decline represented a correction from elevated levels rather than a systemic collapse. “When you think about Bitcoin’s year, all that has really happened up to that point is that it has given up the extreme excesses of the previous year,” Balchunas wrote in a follow-up post.
Gold’s market capitalization doesn’t yield a return, yet the precious metal retains significant value based on scarcity and historical acceptance as a store of value, financial analysts said. Bitcoin proponents argue that the cryptocurrency serves a similar function, with additional utility in remittances and corporate treasury applications.
According to blockchain data, the 2024 Bitcoin halving reduced new issuance, tightening supply as demand for ETFs increased. On-chain metrics showed significant accumulation by larger holders during recent price declines, with a significant portion of Bitcoin supply sitting idle for more than 12 months.
Market valuation metrics such as the MVRV Z-Score indicated periods of undervaluation compared to historical bull market triggers, cryptocurrency analysts said.
The Dutch tulip mania lasted about three years, from 1634 to 1637, with prices collapsing after reaching peak levels. Launched in 2009, Bitcoin has experienced multiple boom-and-bust cycles, reaching new price highs after each downturn.
Balchunas concluded that market participants were “overanalyzing” short-term price movements, suggesting that periods of asset consolidation are typical of long-term investment cycles.
