Crypto veterans know this feeling: the price of Bitcoin just almost halved. This has happened several times before. In 2018, 2019 and 2020 for just a few recent examples.
This time the fall is quite spectacular, from more than $80,000 to about $45,000 in just two months (before rebounding slightly to be down about a third). The second-leading cryptocurrency, Ethereum, has suffered a similar retreat. It collapsed from more than $5000 to about $2700 in just a month.
The widespread retreat in crypto has many causes, including an FBI sting that saw a Bitcoin ransom seized by authorities. If crypto isn’t safe for criminals, does demand for it collapse?
The normalisation of markets is another reason, with bond yields rising and more traditional assets finally offering decent returns.
A third possible cause is the increasing menagerie of “meme stocks” — Game Stop, AMC and all the rest, distracting young retail investors who might once have seen Bitcoin as the only way to undermine the mainstream financial system.
Can Bitcoin recover and fulfil its destiny as a mainstream investment? Or will it continue to slide? The crypto veterans will hold on regardless.
Tulipmania.
I expect it to fulfill it ‘destiny’ (however one might choose to articulate that). BTC came from creation of the Blockchain concept… conceivably to be as disruptive as has been the Internet. Its rationale was as a move to ‘independent money’ that would provide for a fairer society; free of malicious interference and governing cliques. Many people continue to fret about possible ‘controlling’ action by these governing cliques; who have a lot to lose. There’s always a relationship between BTC and the alternatives (such as Ethereum)… when BTC declines, some altcoins will rise as traders exit their BTC stake and enter or top their alts, often as a deliberate, temporary strategy. A period of sideways BTC action will benefit altcoins – many of which are fundamentally sound projects. But periods of sideways movement in the price are exasperating for holders of smaller stakes. They can only sit and watch as the whales–with their multi-million-dollar positions–pump and dump to make serial gains from these movements.
This move to independent money, which I believe underpins much of the fervent adulation for crypto, is both sweet and hopelessly naive. If it ever gets anywhere it will be a case of meet the new boss, same as the old boss.
The people pulling all the strings, that is, the seriously wealthy, won’t be letting go of power no matter what. They’ll either destroy it or usurp it’s power.
Then we’ll go back to trading in salt. Same as it ever was, same as it ever was …
The sooner bitcoin dies the better. Every day junk mail flooding my in box with bit coin rubbish. Its a con. Its unbelievable that it has been allowed to continue. ‘Mining’ bitcoin is not helping climate change, & is now contributing to it. As well as encouraging international crime. Its the biggest rort of the last two centuries.
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