A reported endorsement from Square Inc. (NASDAQ: SQ ) seemed to give the bitcoin bubble new momentum on Nov. 17, as the price nearly cracked $8,000 per coin.

The dominant cryptocurrency, with 57% of the industry’s market cap, was at $1,000 in January. The roughly 16,684,000 bitcoins now have a market cap of over $131 billion, and the whole cryptocurrency market is worth over $228 billion.

The market’s big story, however, was a popped bubble in Bitcoin Cash, a rival blockchain that forked from bitcoin in July. Bitcoin Cash jumped to over $3,200 on Nov. 12 before quickly falling back, trading at just $1,100 each on Nov. 17.

The question of what bitcoin is remains unresolved. If it’s a currency, it’s a useless one because of the cost of moving transactions and trades through its blockchain. If it’s an asset like gold, it’s a very good one, absorbing the market’s fears in its price as gold languishes.

To Fork or Not to Fork

The key to making bitcoin more liquid is the SegWit2X fork, originally scheduled for Nov. 17. The fork was abruptly cancelled due to lack of support, but Coinbase, the largest exchange, put out a blog post late on Nov. 16 saying some miners might still move ahead with it, giving bitcoin owners another new coin, dubbed Bitcoin2X.

This idea that bitcoin traders would get what amounts to free money spurred a speculative run-up in the main bitcoin blockchain. Each run-up creates more greed among those hoarding coins, and the average holder now claims they won’t sell until the price gets to $196,000.

But that’s not the way they’re treating spinoffs like Bitcoin Cash. Once a bitcoin derivative becomes liquid, the liquid asset is quickly dumped by hoarders convinced they have free money. They treat it like a dividend.

The balance of supply and demand is thus precarious, based on scarcity. The Square report, that it would test a bitcoin marketplace in its Cash payments app, may also create a short-lived move.

As with anything bitcoin touches — such as Overstock.com Inc. (NASDAQ: OSTK ), up 193% since it announced it wanted to make a market in cryptocurrency assets — the announcement turned to gold for Square, which rose 5% in two days, a gain of over $500 million.

A Larger Disease

My own view is that bitcoin is a symptom of a larger disease.

There is an immense amount of cash splashing around, and a growing shortage of good investments as policymakers add to the cash pile and take cash out of a productive activity.

Money that isn’t moving is useless. Bitcoin lets money move, even if in the form of speculation on decryption keys, which sounds great but doesn’t create anything in the real world.

We have seen this movie before, many times. Every recession is preceded by speculation on some asset — real estate, dot-com stocks, gold — rising to the skies.

The fever rises until it breaks, and once it does all that “money” disappears, the way electricity will suddenly discharge from a capacitor, causing other asset prices to fall as there is less money to buy them with.

The economic damage left by a speculative bubble, unlike the bubble itself, is very real. The phony mortgage “insurance” of the last decade led to the Great Recession, and the need to recapitalize the world’s banks.

What the world really needs is more investment in goods and services, more things to buy in a deflationary world, so investors aren’t tempted to speculate on decryption keys whose supply is kept artificially low.

But this much should be clear by now. A liquid bitcoin is a worthless bitcoin.

Dana Blankenhorn is a financial and technology journalist. He is the author of a mystery novella involving bitcoin, The Reluctant Detective Saves the World, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned no shares in companies mentioned in this story. To follow the value of cryptocurrencies bookmark https://coinmarketcap.com/.