Investors at times are gripped by what, in retrospect, seems to have been mass hysteria. The price of something climbs higher and higher, with nothing to justify the rising price except investors’ hope that it will go higher still. Then, this speculative bubble pops, buyers vanish, and the price collapses.

With hindsight, it is hard to see how people could have been so foolish. Yet, at the time of the bubble, it seemed foolish to sit on the sidelines while others became rich.

Which brings us to bitcoin BTCUSD, +0.33% Bitcoin does not generate cash or pay dividends, but bitcoin prices can rise as long as greater fools think that they can sell at higher prices than they paid.

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