There are a couple of reasons why the bubble is sure to burst. The first is just that it’s a bubble, and any chart which looks like the one at the top of this post is bound to end in tears at some point. But there’s a deeper reason, too — which is that bitcoins are an uncomfortable combination of commodity and currency. The commodity value of bitcoins is rooted in their currency value, but the more of a commodity they become, the less useful they are as a currency.
Definitely one of the best articles I’ve read on Bitcoin. I think the idea of bitcoin as commodity actually makes a lot more sense, given that it’s an artificially constrained resource that’s “mined”.