'Before we relegate a speculative event to the fundamentally inexplicable or bubble category driven by crowd psychology, we should exhaust the reasonable economic explanations. Such explanations are often not easily generated due to the inherent complexity of economic phenomena, but bubble explanations are often clutched as a first and not a last resort. Indeed, “bubble” characterizations should be a last resort because they are non-explanations of events, merely a name that we attach to a financial phenomenon that we have not invested sufficiently in understanding. Invoking crowd psychology—which is always ill defined and unmeasured—turns our explanation to tautology in a self-deluding attempt to say something more than a confession of confusion.' - Garber, Peter M; Famous First Bubbles
The word bubble is used throughout these forums and the wider web to describe Bitcoin as if it is self evident that this is what it is and will consequently pop or deflate in a short span of time. Certainly the market is volatile and displays bubble characteristics, but is it legitimate to use the term before discussing a rational pricing model or even before there is a significant crash? If it is legitimate and price rises/falls have no other economic explanation than pure speculation then what is an efficient strategy for a rational investor?
There is a nice paper called 'Riding Bubbles' by Guenster, Kole and Jacobsen from 2010, that I would be interested in discussing if anyone wishes to take a look along with any historical comparisons to past famous bubbles.
https://research.mbs.ac.uk/accounting-finance/Portals/0/docs/2010/RidingBubbles.pdfThe global nature of Bitcoin and high levels of non professional trading, I think makes it a very interesting subject for study. If it keeps growing at its current rate I think a great many people will be forced to ride the bubble whether they believe in it or not.
