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This Is the Week Wall Street Went Nuts Over Cryptocurrencies (bloomberg.com)
Wall Street banks that weren't already on the bitcoin bandwagon appear to be piling on, or least eyeing seats, after the cryptocurrency surged to all-time highs this week on the way to $6,000. From a report: Analysts are working to keep up with demand from clients for information. UBS and Citigroup published extensive explainers on blockchain technology, while senior executives at JPMorgan Chase warmed to the cryptocurrency during the bank's third-quarter earnings call. The digital currency has risen more than fivefold after trading at less than $1,000 as recently as December, breaking the $5,000 mark this week and already targeting the next thousand-dollar level. Throughout its rise, the cryptocurrency shrugged off tighter regulations, feuding factions and warnings from the likes of JPMorgan's Jamie Dimon of fraud and an eventual price collapse.
You can't categorically declare that Bitcoin's price is "unwarranted by the fundamentals of the asset". It's a new asset type and its fundamentals are yet to be determined. We're still feeling out Bitcoin's ultimate utility and long-term viability. Surges like this are inevitable.
We've gone through this process several times already. Each time people have declared it a "bubble", and yet... while each surge has been followed by a "crash", the average price after each crash has been significantly higher than the average price before the preceding surge. This was true at $2, $30, $200, $1200, and $4000. The long-term trend has been toward gradually increasing prices and less volatility.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
It is why most wealth is not maintained in currency form, but rather assets that increase in value faster than inflation.
Perhaps.... but imagine a world with a deflationary currency. In order for businesses to persuade you to invest in their business or their debts, the bar for investing will be a much greater return --- because the business will have to increase in value faster or pay in interest a rate of interest you expect to be greater than the rate at which the deflationary currency increases in value, thus the cost of capital will be high, and businesses will be more responsible and careful with $$$ they spend not to waste it, Whereas with an inflationary currency it is almost a "Given", that tangible commodities and businesses will become worth more currency over time.