People will say all kinds of things about what Bitcoin is: digital gold, the successor to the dollar as a reserve currency, the future of money, whatever. The thing about Bitcoin, though, is that it\u2019s volatile \u2014 and thus, risky. And right now, the market is feeling risk-averse. Bitcoin\u2019s price in dollars has fallen by more than a third since January 1st.<\/p>\n

A drop this dramatic doesn\u2019t have just one cause, though it probably didn\u2019t help that we\u2019ve been exiting zero interest rate policy (ZIRP). For a while, the US central bank had set interest rates quite close to zero in order to stimulate the economy. In that environment, it doesn\u2019t make sense to keep money in your savings account \u2014 your savings won\u2019t earn enough interest to keep up with inflation. Less-risky assets \u2014 bonds, treasury bills \u2014 look unattractive.<\/p>\n