A typical bubble occurs when a group of investors are too invested in an asset class and then decide to flee that asset en-mass with most not returning.
The recent drop in Bitcoin is deceptive because it has most of the hallmarks of a bubble bursting. Even the charts look practically identical to a classic bubble in economic theory.
The major difference between bitcoin today and those other bubbles is that the number of wallets and users has not peaked yet.
During the real estate bubble, for instance, almost all available buyers were maxed out into the market. And even though the real estate bubble was significant by historical standards house prices didn't go to zero. They have since fully recovered and are actually above their peak levels in the United States.
At the beginning of the downswing in prices Coinbase was opening between 40-100k thousand accounts per day. Although we don't have the exact numbers those numbers are definitely still increasing.
LocalBitcoins for instance is still doing 80 million dollars per week in bitcoin sales. During the peak in December the number was about 130 million.
If Coinbase by itself at 15 percent of the market is adding say 300k users per month presently, it wouldn't be crazy to conclude that the entire world is adding 700k-1mil users per month at exchanges etc.
Bitcoin by nature is a limited resource. Every day more and more people are trying to buy that limited resource. Even if they eventually sell, the first natural action of a new Coinbase user is to buy Bitcoin. In order to sell Bitcoin they have to have bought it first unless they already had it.
My point is that I too thought that we were in a catastrophic bubble where prices would go to 100 dollars per coin. But after looking at the growth in the number of people involved it became obvious that the reason for the recent market drop was because of how quickly prices had increased.
People who bought at $300 in 2013 and still had coin would be sort of irrational if they didn't take advantage of the ability to cash out their investment.
It would be a huge mistake for people to look at the market and give up on Bitcoin. Price movement is inevitable in situations where people have made millions of dollars quickly. But as the amount of networks increase that are connected to and that are linked to bitcoin in some way, the more fractional individual ownership of the coins will become and the less influence any one person will be able to have on the market.
Bitcoin is just a way for people to store their money online. Old people used to hide it under the mattress today they hide it on a piece of paper somewhere.