For those who thought $10,000 was ridiculous, what can you say about Bitcoin worth over $100,000? After 15 years of crypto boom-bust cycles, stories of rags-to-riches (and back again), scams and bankruptcies, the carnival mood is back and silencing us naysayers.
American politicians also joined the party. Donald Trump has appointed pro-crypto officials, focused on Bitcoin reserves, and even promoted his own coin. So are punters who are trying their hand at the risky meme coin market and losing money.
Like the 18th-century Roman carnival, which the poet Goethe took part in, foolish behavior other than knives and brawls is allowed, but bemused tourists are in the minority.
Of all the people, the one with the most sensible analysis right now is Anthony Scaramucci. Bitcoin’s new milestone signals widespread acceptance of Bitcoin as a tradable asset and portfolio investment, with big gains and heart-breaking drawdowns (from the last high to the highest). ). The bottom decline was approximately 76%).
But the flip side of it being a decentralized architecture with no intrinsic value and huge energy consumption means no one will use Bitcoin to buy groceries. Just 7% of US consumers own Bitcoin, and a study published last month by the UK Financial Conduct Authority found that just 16% of those who own cryptocurrencies use these tokens for payments. I found out that it is.
While skeptics focus on the lack of real-world adoption, it’s the speculators who rely on so-called digital gold that are getting richer.
Another point in favor of “Hoddlers” (named after the famous “Hoddlers” call to hold on to cryptocurrencies, which became an insider joke meme) is that It means that it represents a bet on. This is somewhat ironic considering the movement that was originally formed. By Libertarian Cypherpunk.
Almost $10 billion has flowed into Bitcoin exchange-traded funds (ETFs) since President Trump’s victory, which makes sense given the potential to benefit from regulatory forbearance.
Gary Gensler’s departure from the U.S. Securities and Exchange Commission likely means more space for tokens that have worked under the “unregistered securities” label, with U.S.-based Coinbase Global onshore It has been a clear beneficiary of deal flow and products; the company’s stock has doubled this year.
A friendlier regulatory environment means more financial institutions are expected to participate, even in risk-averse Europe.
Still, even crypto advocates know that this trade has its limits. We are a long way from Friedrich Hayek’s vision of “denationalization of currency,” in which states would ideally cede monopoly control of their currencies to the competitive private sector.
President Trump’s recent call for Britain and France to accept dollar dominance shows that he is far from a crypto purist. A Bitcoin strategic reserve with all the risks to US taxpayers seems like a bridge too far.
And while “digital gold” is a convenient nickname that allows optimists to envision Bitcoin rising another 10 times, reaching a market capitalization of $20 trillion, or on par with gold, its price has recently fallen below the Nasdaq index. It is correlated with tech stocks, suggesting that Bitcoin’s value is substantial. -To maintain its speculative luster, the global macro environment must remain healthy.
For now, US monetary policy is accommodating, and tech stocks like Nvidia and Palantir are soaring (and have outperformed Bitcoin this year). But Bitcoin could be hurt if the twin engines of the U.S. economy and stock market falter, perhaps due to tariffs or inflation.
There are other long-term issues raised by this gathering. The first is how dangerous the gambling of finance is in a world of 24/7 trading apps, legalized sports betting, and instant payouts, something crypto enthusiasts ignore. It’s something I tend to do.
Like two sides of the same coin, the crypto rally has exposed fund raisers to a proliferation of scams and get-rich-quick schemes.
The urge to make money fast and to replicate the seemingly out-of-reach profits of early adopters has led to the inexplicability of Hawk to a meme coin and the Peanuts the Squirrel token (market cap: $1.2 billion). This could lead to a horror show like price hikes.
Going forward, there will be a need for reregulation, and perhaps a complete rethinking of how the line between investing and gambling is managed.
The second question is whether we are already seeing signs of a future financial system that goes beyond speculation. It takes time for complex systems to emerge, and those who have doubts about cryptocurrencies may also miss that.
Perhaps new experiments, such as the stablecoin lending pilot with tokenized money market funds announced this week by First Abu Dhabi Bank and Libre Capital, are an indication of where this wildland of digital transactions will ultimately lead. It will be a good indicator.
I hope this carnival approaches maturity. But the history of financial mania, especially those with political backing, suggests that some more mishaps are on the way. ©Bloomberg
