The reason is simple: the Bitcoin system delivers nothing to the holders of its units (BTC).
Every financial system that issues units delivers something to the holders of those units. If the market price per unit is much higher than what that system can actually deliver, we call it a bubble, and sooner or later it bursts.
But with Bitcoin, the delivery is zero, while the price is enormous, which is a recipe for the most spectacular bubble burst, a total crash.
To understand this, let’s look at how financial systems deliver to the holders of their units and how this is connected to the market.
Companies that issue units as shares deliver through dividends, share buybacks, or liquidation. If a share is priced at 100 dollars, but the company could only deliver 1 cent in dividends or 1 dollar in liquidation, what would happen to the price? A decline would be inevitable.
The same applies to monetary units, whether issued by banks or platforms like PayPal.
Banks issue their units as loans, and through borrowers they deliver goods, services, and labor to unit holders whenever those borrowers obtain units to repay their loans. If borrowers fail in that repayment and thus in delivery, the banks deliver themselves by selling seized assets at auctions. If a bank needs to close an unpaid loan of 25,000 units and offers collateral in the form of a Toyota Camry, no one would give a house for that number of units. Otherwise, it would be considered an irrational market exchange.
The same irrationality would apply if someone paid more for one unit of PayPal money than what PayPal pays out. For 1 USD on PayPal, they will pay you 1 USD to your bank account. No one in the market would give you 2, 10, or 100 dollars for one unit of that electronic money.
But now consider how people act in the case of Bitcoin.
Neither its pseudonymous creator, who designed the protocol for issuing units, nor the network that maintains them in a decentralized database, pays anything to unit holders. If you hold 1 BTC, you will not receive even a single cent from the system, let alone a dollar, as in the case of PayPal.
Furthermore, BTC is not issued as someone’s loan, so the system does not directly offer you borrowers’ collateral or indirectly their goods, services, and labor.
Finally, BTC is not a share in a company, so you cannot receive even a single cent in liquidation or dividends.
And yet, people currently pay a staggering $70,000 for one BTC unit. The delivery per unit is zero, while the price per unit is enormous.
This behavior is often justified by the scarcity of the units, their decentralization, speed, and lack of control by authorities. But this is ironic. It is like a company going bankrupt and being unable to pay anything to shareholders in liquidation, while management addresses them with these words:
"We have a limited number of shares and will never issue more, and we have also introduced blockchain technology to store them. It is an unbreakable, decentralized, cryptographically secured system, so no one in the world, not even any government, can take your shares."
Positive rhetoric would be used to hide a completely negative reality.
Although the Bitcoin market is currently under the influence of such positive rhetoric, it cannot erase the negative reality of zero delivery, to which the price will inevitably yield. A complete crash of that market is inevitable.