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Comment by DINKDINK | Hacker News Reader

>Bitcoin used to be at $1, now it's at $1,xxx. What happened in between was a massive influx of newcomers.

That argument does not follow. An equivalent argument is:

"A house in San Francisco used to cost at $100k, now it costs $1000k. What happened was a massive influx of new people to San Francisco."

What happened is that the utility of a house in San Francisco changed and no one was willing to sell below $1000k.

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> "A house in San Francisco used to cost at $100k, now it costs $1000k. What happened was a massive influx of new people to San Francisco."

Seems pretty reasonable to me.

Except that it isn't--it's a bubble and at some point that bubble is going to pop. We already went through all this in 2008 and people have already forgotten the lesson! It's amazing how fungible the human mind is. "This time it will be different." That's what every communist who ever lived thought, too. This time, the stupid scheme of wealth transfer will work perfectly if we just can pass a few more laws and control a little bit more of people's behavior, we can build our everlasting, perfect utopia.

Real estate crashes when the last marginal buyer is priced out of the market. California real estate has crashed 2-3 times just in my lifetime. It will crash again and whoever bought at the top will be bagholders. It is the immutable law of bubbles.

Asset prices move because bids /and/ asks change not because the number of people who hold the asset increase.

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