People tend to take victory laps prematurely – both bulls and bears. From its most recent peak at $65 000 in April, Bitcoin’s precipitous fall to around $37 000, at the time of writing, represents a crumbling in the recent edifice of invulnerability among a newly-minted generation of crypto tycoons. (For the purposes of this piece, we will use Bitcoin and crypto synonymously).
Is it a loss of faith in new age “market gods” like Elon Musk, on-off supporter then detractor of Bitcoin? There is also the curious case of the DogeCoin millionaire Glauber Contessoto, who famously continues to HODL after staking his entire net worth on the meme coin, garnering his own troop of followers through the land of “diamond hands”. Maybe it’s China cracking down on Bitcoin while preparing to launch its own digital yuan? That said, if you followed the herd and bought at the peak, remember, herds tend to get slaughtered.
Perspective is important, so let’s zoom out. Recent gamification and “memefication” of markets erode the underlying merit of cryptocurrencies as an asset class.
Firstly, let me say that I support the ideological basis of why crypto exists. Crypto is an interesting innovation and this is likely just the start. Major central banks are also looking into this space, not just as regulators, but rather as potential issuers of central bank digital currencies (CBDC). The regulatory and policy implications as we move into an era of CBDC are huge; but a topic for another day.
Denne historien er fra 11 June 2021-utgaven av Finweek English.
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Denne historien er fra 11 June 2021-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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