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It looks to me like a bubble. Much of the people investing in bitcoin are doing so because of hype, or at least it looks that way. Also there is no real way to short sell on bitcoins, so the market is entirely controlled by the people who are into the hype. People who are skeptical don't have much affect over the price.

However that doesn't mean bitcoins are in a bubble, for that the true value would have to be lower than what it is. And I don't know how to even roughly estimate bitcoin's true value. That is, what the price will turn out to be in the long run, what the supply and demand will be. That depends on how big the bitcoin economy will grow, and the hype, while irrational, might actually bring enough people to it to make it work. Or it might just die as people get disappointed or move onto the next thing.

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