Key Insights
- •Eric Balchunas argues that Bitcoin's 17-year survival and multiple recoveries make tulip-bubble comparisons outdated.
- •Bitcoin remains up approximately 250% over three years and gained 122% last year, despite recent pullbacks.
- •Balchunas contends that non-productive assets like gold and art are valued, challenging claims that Bitcoin lacks utility.
The Tulip Trap: Why the Bitcoin Analogy Fails
In 1637, the Netherlands experienced a frenzy over tulip bulbs, with prices reaching the equivalent of luxury canal houses. This period of intense speculation peaked, then crashed, leaving a cautionary tale in history.
Nearly four centuries later, in 2025, Bitcoin has seen a pullback of 27% from its October high of $125,481 to $91,972, reigniting comparisons to the historic tulip mania.
However, as Bloomberg ETF analyst Eric Balchunas outlined in an X thread on December 6, Bitcoin (BTC USD) is not a fragile asset destined for a single bloom and inevitable collapse.
Balchunas highlights that Bitcoin has endured numerous significant challenges over its 17-year history and continues to stand strong, having appreciated by 250% in the last three years alone, despite experiencing setbacks.
In a market characterized by rapid shifts between euphoria and despair, Balchunas's perspective serves as a crucial reminder that Bitcoin's resilience is a key factor in its enduring value.
Bitcoin's Endurance Versus Tulip Mania
Balchunas directly addressed the comparison in his post: "Tulips rose and collapsed in like 3yrs. Punched once in face and KO’d. Bitcoin has comeback from like 6-7 haymakers to reach ATHs and has survived 17yrs."
The Dutch tulip mania unfolded rapidly over a three-year period, from its stealth phase to its peak and subsequent collapse, as depicted by its sharp ascent from 1634 to 1637.
In contrast, Bitcoin has navigated significant crises, including the 2011 Mt. Gox hack, the 2013 Cyprus banking crisis, the 2018 ICO winter, the volatility of 2020, the 2022 Terra/Luna implosion, and the recent cooldown in November.
Despite facing these substantial challenges, BTC has consistently recovered to reach new all-time highs for 17 consecutive years since its inception.
Balchunas, a senior ETF analyst at Bloomberg who has closely followed spot Bitcoin funds since their launch in January 2024, brings a deep understanding of the asset's performance and market dynamics to his analysis.
As of December 6, Bitcoin ETFs alone held $126 billion in assets under management, according to SosoValue data. These ETFs demonstrated resilience by weathering $3.8 billion in outflows during November without significant disruption.
Unlike tulips, Bitcoin has benefited from institutional support, with major firms like BlackRock and Fidelity providing substantial inflows. For instance, Bitcoin ETFs have seen $15.2 billion in year-to-date inflows, helping to stabilize the market.
Furthermore, Bitcoin's returns underscore its strength. Even after the recent pullback, its three-year gain stands at 250%, and its 122% gain in 2024 significantly outperformed the S&P 500's 24% increase. This consistent performance indicates sustained growth rather than a fleeting trend.
BTC USD Price: Endurance and Utility
Balchunas further elaborated on Bitcoin's performance, noting: "If you think about bitcoin’s year, all that really happened (at least up to this point) is it gave up the extreme excess of last year. It rose +122% and was 5x everything under sun. So even if 2025 ends up flat or moderately down year and it’s still operating at its 50%-ish ann avg."
This perspective suggests that Bitcoin is not experiencing a crash but rather a correction after a period of significant gains. Last year's surge, fueled by media attention and widespread enthusiasm, reached its peak around $108,000, resembling the speculative peak of the tulip market.
The current dip is seen as a "return to normal," testing investor resolve. However, institutional investors, including BlackRock's IBIT with $71 billion in assets, remain steadfast.
The comparison to tulips falters significantly when considering utility. Balchunas pointed out: "Yes, bitcoin and tulips are both non-productive assets. But so is gold, so is a picasso painting, rare stamps- would you compare those to tulips? Not all assets have to ‘be productive’ to be valuable."
This is accurate; gold, with its $13 trillion market capitalization, does not generate dividends, and Picasso's artworks derive value from scarcity and historical significance rather than productive output.
Bitcoin News Sentiment
Bitcoin aligns with these valued non-productive assets, functioning as a digital store of value with verifiable scarcity (limited to 21 million coins) and increasing practical applications. These range from facilitating remittances in El Salvador to being held by corporations like MicroStrategy, which possesses 650,000 BTC.
Over the past five years, Bitcoin's Sharpe ratio has been 1.2, outperforming gold's 0.8 in risk-adjusted returns, according to CoinMetrics Q4 2025 data. In contrast, tulips were a short-lived commodity fad, not a sustainable asset class.
The reactions to Balchunas's analysis reflect the diverse sentiment surrounding Bitcoin. Colin Talks Crypto commented: "The thing is some ppl just hate this asset and want to enrage the ppl who like it. Let’s not beat around the bush. We’re talking about @PeterSchiff here. lol" This highlights the tendency for Bitcoin critics, like Peter Schiff, to provoke strong reactions.
Garry Krug, head of BTC strategy at AIFinyo, offered a more poetic perspective: "Bubbles don’t survive multiple cycles, regulatory battles, geopolitical stress, halvings, exchange failures and still return to new highs. That kind of durability is the opposite of a mania."
Bitcoin News in the Bigger Picture: Cycles, Not Crashes
When viewed in a broader context, Balchunas's analysis provides a grounded perspective amidst market volatility. Bitcoin is subject to cycles, and while its average annual return of 50% can mask significant drawdowns, such as the 77% drop in 2022, the asset is designed to withstand these fluctuations.
The April 2024 halving reduced the issuance rate to 3.125 BTC per block, thereby tightening supply just as demand from ETFs was increasing. Reports from Santiment indicate that whales accumulated an additional 18,000 BTC in November despite the price dip. Glassnode data shows that 74% of Bitcoin supply has remained dormant for over 12 months. The MVRV Z-Score currently stands at 1.8, suggesting the asset is undervalued, remaining below the 2.0 bull market trigger.
This Bitcoin news gains particular significance in mid-December, following the release of PCE inflation data on December 5, which showed a 2.8% increase. This data has led to an 85% probability of a Federal Reserve rate cut, according to CME FedWatch.
Historical patterns suggest that the current phase may represent the "disbelief" trough on market cycle charts, a period where astute investors accumulate assets before broader market awareness drives prices higher.
Balchunas concluded his analysis by stating, "People overanalyzing it IMO." This sentiment is understandable, as assets naturally cool off, consolidate, and then continue their growth trajectory. Bitcoin has demonstrated this pattern seven times since its inception.
Ultimately, the chart of tulip mania serves as a historical reminder of fleeting speculative manias. Bitcoin, however, is fundamentally different; it is a battle-tested asset class that has endured 17 years of stress, demonstrating its resilience on the blockchain.
As the new year approaches, this Bitcoin news prompts a crucial question: given its proven endurance, why would one bet against it?