1) Things are godawful and everybody is suffering because of X.
2) Free-market / natural solutions start coming into place and the X situation begins to steadily improve.
3) In the course of improving, X strikes again in a way it used to when things were godawful, though the trend is still unambiguously positive.
4) Government steps in: WOAH!! X is **too important**! We can't let the free market handle this! Regulations begin.
5) Progress in terms of the X situation either slows down, halts, or even regresses.
What we have right now is hyperinflation due to rampant speculation.
I don't think that word means what you think it means.
Inflation is a term conflated to mean one of two things: 1) money supply increasing, or 2) prices of goods going up. In the case of #1, a greater money supply will exert pressures to bring the price of goods higher, because you have a larger amount of currency chasing the same amount of goods. Thus each unit of currency is worth less than it was before. In the case of #2, prices can go up for many reasons, only one of which is money supply increasing, but in any case, the net result is that the same unit of currency can purchase less than it did before. In either of the cases, the result of inflation is that the currency is worth *less*.
What you see in the case of bitcoin is that the currency is worth *more*. Each bitcoin will buy you more than it did before. So it's actually the exact opposite of inflation. If things were priced in terms of bitcoins, then at BTC = $500 USD, my rent would cost 5.8 bitcoins, whereas now at BTC = $900 USD, my rent would cost 3.2 bitcoins. You could call it deflation except that has an irrational negative connotation associated with it, and it's also a conflated term analogous to inflation: either 1) money supply decreases, or 2) prices go down. In either case the effect is that the currency is worth more, which is what supposedly happened here.