In three short months, four hundred years ago, a single tulip bulb (called a Switzer) rose in price by 1,200%, selling for 5,000 Guilders: the same price as a family home in Amsterdam. Madness? Undoubtedly…assuming it hadn’t flowered in the meantime, the same bulb was worth just 8 Guilders three months later. So you won’t see us doing that again…but wait, on 4 February this year (in a single day) the value of Dogecoin increased by 50%, and six days later it had risen by a further 300%: all because Elon Musk (the self styled “Technoking”) tweeted on 4 February that “Dogecoin is the people’s crypto…no highs no lows, only Doge”. Like Bananacoin and Ponzicoin (I’m not making those up), Dogecoin started out in 2013 as a joke, and today it has a market capitalisation of $7.4 Billion: so what does that tell us about cryptocurrencies?

And, more to the point, what does it tell us about Bitcoin, which certainly isn’t a joke and whose market price also hit a record high this week: is that a bubble or a boom…and should we be reaching for the tulip catalogue?

After all, when it comes to Bitcoin, we’ve been here before.

Market Volatility

Between January and March of 2018, Bitcoin fell in value by 80% on the MVIS CryptoCompare Index (, to less than $4,000: by November last year it was back up to an all time high of more than $19,000, surging to $34,792.47 by 3 January, crashing 17% the next day, and then soaring to $40,000 five days later: now it stands at $56,056. Calling that volatile is like calling Donald Trump unrealistic…but in fact there’s more to the data than meets the eye.

Bitcoin and Blockchain

Bitcoin was the world’s first cryptocurrency, created to function as digital (non fiat, non government backed) money, and like its real world counterpart it has many of the virtues of reliability and trustworthiness you can expect in conventional currencies: strictly controlled circulation, security and convertibility. But most importantly, unlike cash, Bitcoin has the potential to replace financial intermediaries, because it is inextricably bound up with the future of decentralised ledger markets…Blockchain. Just think about that for a moment: Blockchain can directly connect a buyer with a seller, safely and securely, and without the need for investment banks (or any banks for that matter) to broker the deal. The cost of the transaction falls at a stroke by up to 20%. Cross border trade is quicker and less expensive (no brokers taking their cut) and transactions in land are more transparent and cheaper (less for the lawyers to do). The list is virtually endless…and the cold, hard fact for fiat currencies is you can’t spend cash on a decentralised ledger (not least because the internet doesn’t have a till). You need cryptocurrencies…you need Bitcoin.

So, bearing in mind economic orthodoxy defines a speculative bubble as a deviation from fundamental value, the question we have to ask is what the fundamental value of Bitcoin is, and whether there is actually any significant deviation from that value in light of recent price movements. We can answer those questions easily: the fundamental value of Bitcoin is Blockchain (see above), and all those volatile movements in Bitcoin’s price over the last three years are in fact closely linked to the progressive opening up of Blockchain as a key innovator across international markets.


First of all there’s the issue of regulation: across the globe regulators have been notoriously wary of assuming oversight for decentralised ledger markets, and Bitcoin in particular. After briefly flirting with the idea, the US Federal Reserve pulled away from full regulation in 2018, and the Reserve Bank of India went so far as to prohibit cryptocurrency transactions altogether in April 2018. As a result the fundamental value of Blockchain decreased (consumers are rightly wary of dealing in unregulated markets), and the value of Bitcoin fell with it…that’s the reason for the 80% fall in 2018 (see above again). There wasn’t a bubble at all, in fact there was a close correlation in cryptocurrency pricing and the underlying value of Blockchain markets. It was all about regulation (or the lack of it).

But then fast forward to the surge in Bitcoin’s value last year. That came in the aftermath of the Indian Supreme Court reversing the cryptocurrency ban in March 2020 (, in addition to which Prime Minister Modi’s Government had by then introduced a “sandbox” programme as a prelude to full Blockchain regulation (not to mention adopting several Blockchain initiatives itself). When the world’s fastest growing large economy speaks, the world listens, and regulation was back on the cards. Add to that a move by US Regulators to consult on crypto regulation last December as a prelude to new enabling legislation ( the fundamental value of Blockchain strengthened as a result and Bitcoin rose with it.

No bubble there then…

A New World Order

And, of course, since March of last year we’ve had a series of COVID related lockdowns across the world: international commerce moved increasingly online, Jeff Bezos made a few more billions and Blockchain was back centre stage. A quantum leap that most analysts thought would take a decade or more had happened within a year. The fundamental value of Blockchain increased, Bitcoin rose price from November, and its made steady progress ever since.

So this isn’t a bubble at all: the fundamentals are fully in line with market perceptions…and you can leave the tulip catalogue in the cupboard…

Red Ribbon Asset Management

Red Ribbon Asset Management ( is constantly searching for new ways to apply emerging technologies, including Blockchain, AI and Data Analytics, to achieve its MII objectives of optimal environmental and social impact consistent with above market rate returns: steadfastly committed to enhance customer experience through intelligent adoption of mainstream impact investment strategies.

Executive Overview

It’s fascinating to track the correlation between Blockchain and Bitcoin back over three years, and if nothing else the relationship between the two teaches us that it always pays to keep your eye on the bigger picture.

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Suchit Punnose

Author Suchit Punnose

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At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.