Bitcoin crashes don't actually behave like bubbles bursting—they’re more like balloons slowly leaking air.
SSRN · March 17, 2026 · 6427883
The Takeaway
Traditional speculative bubbles are characterized by a slow build-up and a sudden, violent pop. By analyzing daily data, this paper finds that Bitcoin often does the opposite: a rapid inflation followed by a much slower, gradual decline, suggesting the 'bubble' metaphor might be fundamentally wrong for digital assets.
From the abstract
Speculative markets may be characterized by sharp falls after a slow build up. Sometimes the converse happens. We suggest a number of mechanisms that are able to produce this kind of behaviour and we demonstrate their plausibility by simulation. The models are then fitted to daily data on Bitcoin. In constructing these models we show that it is essential to take account of volatility and non-normality. We also investigate the possibility of a dynamic tail index. The conclusion, at least for Bitc