Tulip Mania or Future Technology? Experts Clash Over Bitcoin and Blockchain Valuations

The Tulip Comparison – An Analogy Under Scrutiny

The debate over the valuation of Bitcoin and other cryptocurrencies is reaching new intensity. After star investor Michael Burry recently compared crypto's leading currency to the famous tulip mania in 17th-century Holland, the industry is pushing back against this analogy^[1].

Eric Balchunas, ETF expert at Bloomberg, considers the comparison fundamentally flawed. "Tulips boomed and collapsed within about three years. One blow and it was all over. Bitcoin has recovered from about six to seven severe blows," he explains^[1]. The cryptocurrency has survived 17 years and repeatedly reached new all-time highs.

Historical Perspective and Current Figures

The tulip mania of the 1630s is regarded as one of history's first major speculative bubbles. At its peak, some rare tulip bulbs are said to have cost more than a house in Amsterdam before the market collapsed by over 90 percent^[1].

Bitcoin, by contrast, demonstrates remarkable resilience despite significant volatility. While the BTC price fell from its all-time high of $126,000 in early October to $82,000 in late November – a decline of 35 percent^[1] – Balchunas emphasizes: "The very fact of its endurance justifies rejecting the tulip comparison, let alone the fact that BTC has still risen 250 percent over the past three years and gained 122 percent in the last year"^[1].

Also noteworthy is the historical context: When U.S. economist Peter Schiff invoked the tulip comparison in November 2013, Bitcoin was trading at around $355^[1]. Since then, the price has increased many times over.

Layer-1 Blockchains in the Line of Fire

Parallel to the Bitcoin debate, an intense discussion is emerging over the valuation of Layer-1 blockchains such as Ethereum and Solana. The crypto industry is currently dominated by a passionate dispute over appropriate valuations^[2].

At the center lies the question: Are these blockchains fundamentally massively overvalued – or do they represent the still misunderstood foundation of an exponential future? Dragonfly partner Haseeb Qureshi and Inversion founder Santiago Roel Santos are engaged in a technically substantive controversy over the sustainable competitive advantages of these technologies^[2].

The starting point was an essay by Qureshi comparing Layer-1s to Amazon in its early phase, followed by two viral Substack pieces by Santos sharply criticizing this perspective^[2].

Paradoxical Market Situation Fuels Doubts

The current situation is characterized by a paradox: while there are numerous positive fundamental developments, activity in the blockchain sector is declining – and prices seem to move in only one direction^[2]. This discrepancy fuels the debate over yield promises from ETH, SOL, and other Layer-1 coins.

The industry-wide discussion demonstrates that the crypto industry is at a critical juncture where fundamental valuation questions must be renegotiated. Whether Bitcoin critics are right with their bubble comparisons or the technology once again proves its resilience will become clear in the coming months.