Market bubbles are nothing new. In the 17th and 18th centuries we had the Dutch tulip bubble, the French Mississippi bubble and the UK’s South Sea bubble. The 19th century saw bubbles in canal building (1830s), gold (1869) and railroads (1890s). In the 20th and 21st centuries we have seen bubbles in Florida real estate (mid-1920s), stocks (late 1920s), dot.coms (2000), and mortgages (2007).

All of these episodes of investment mania crashed causing enormous losses for investors. As always, some investors got in early and got out before the crash and walked away with their winnings.

Analysts should remind themselves that those bubble winnings of the lucky few do not represent wealth creation or rewards for hard work, but a simple wealth transfer from a mass of latecomer losers to a lucky few winners. That’s hardly a desirable model for finance in particular or society as a whole, not least because the end result destroys confidence in markets and retards normal financial functions for a full generation.

The latest bubble is bitcoin. Last December as bitcoin was making its way higher from $8,000, I said that bitcoin might go to $20,000 (it did), but that it would surely come crashing down sooner than later (it did). I based this forecast on a NASDAQ chart showing the dot.com bubble of 1996-2000.

The hyperbolic rise in the price of bitcoin and dot.com stocks was a close fit, which made the subsequent crash easy to see coming. This article updates the bitcoin-NASDAQ comparison with up-to-date charts. Now that bitcoin has crashed more than 65% based on recent lows (with a slight bounce back lately) the resemblance to the NASDAQ dot.comepisode is even more dramatic.

The biggest difference between the two charts is that the bitcoin rise and fall happened 15 times faster than the NASDAQ collapse. Based on these charts, a projection of bitcoin at $2,000 is easily justified.

My own projection is much lower, but either way economic historians will look back on the bitcoin episode as the greatest bubble since the Dutch tulip bubble, maybe greater. At least with the tulip bubble, the last investors got to keep the tulip. With bitcoin, investors will end up with nothing.