Fintech Edge

May 18, 2018

Making Sense of Bitcoin Price Levels


The virtual currency Bitcoin has received considerable attention in the past few years and more recently due to its price surge and subsequent volatility. At the end of 2017–in only a year’s time–the price of a Bitcoin increased about twentyfold to almost $20K. The sudden and unsteady changes in Bitcoin’s price beg the question–how do we consider its price levels? Given that an argument can be made that Bitcoin is a currency, a security, and a commodity, different economic theories might explain the evolution of its price.

Joost van der Burgt is a policy advisor at the Dutch National Bank, the central bank of the Netherlands, and is on a secondment at the Federal Reserve Bank of San Francisco in the Financial Institutions Supervision and Credit Division.

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