Cryptocurrency opinions
Bitcoin: The biggest bubble ever
Donald Trump, Larry Fink and even Swiss Canton Banks: former code critics are currently investing in millions. However, the system works as long as new participants continue to participate.
Cryptocurrency Bitcoin is based on the “Great Fool” phenomenon. You need to find someone who will pay more for it than you once did.
Nathan Rain/Bloomberg
When you buy the Roche stock, you invest in a company founded in 1896 by Fritz Hoffmann-La Roche, developing new drugs with researchers and selling them around the world for the benefit of countless patients. Because of their risk, owners are compensated with dividends and long-term stock price rises. The value of the inventory doubled and increased ten times over time.
To make this possible, Roche had to increase sales and profits at the same rate. What happened to One Franc invested in Roche with an average annual return of 8%? Assuming a reinvested dividend, this will result in the current wealth around 20,000 francs. This is a famous miracle of compound interest.
Based solely on beliefs and hopes
The situation depends on Bitcoin, the king of cryptocurrency. It is created in nothing, and buyers do not take part in the performance of the entrepreneurs, nor receive profits or dividends. When it was released in 2008, one Bitcoin cost 0.8 cents. A total of 21 million Bitcoin, which corresponded to a market value of 1.68 million francs. Few people were interested in cryptocurrencies at the time. Meanwhile, Bitcoin has broken through the 90,000 franc barrier. This is more than 11 million times more than before.
The annual return rate of 160% is 20 times the annual return rate of Roche. The total amount of all Bitcoin has increased from 0.0016.8 billion to 190 billion francs in under 17 years. Questions arise as to how to justify this huge price increase. Are Bitcoin Holders participating in the innovative possibilities of blockchain technology? Not at all: It’s not Bitcoiner who will benefit from this, but only shareholders of blockchain companies. The fairytale rise in Bitcoin prices is based solely on beliefs and hope.
The Crypto community has been extremely successful in attracting once-hard critics for their ideas. US President Donald Trump, who spoke about Bitcoin scams during his first term, has turned into a passionate supporter of cryptocurrency and notorious manipulator. In January he launched his own Trump Coin. Driven by a campaign donation of hundreds of millions, Trump is adjacent to his commando Elon Musk, and wants to make the US a “Bitcoin superpower” of the world and build the country’s strategic Bitcoin reserve.
Larry Fink, CEO of BlackRock, the world’s largest asset manager, described Bitcoin as a money laundering tool in 2017. Then came a radical shift. In early 2024, BlackRock launched its first Bitcoin ETF after putting considerable pressure on former U.S. Securities and Exchange Commission (SEC) former head of the SEC, Gary Gensler (SEC), and putting considerable pressure on its crypto opponent. Has greed clouded Larry Fink’s clear judgment? Through the approval of the SEC’s ETF, Bitcoin left the shady corners and fought towards traditional asset class terrain. ETF approval was a Knights for crypto fans.
«Instead of establishing itself as a payment instrument, Bitcoin won as a pure, unworthy instrument of speculation in close examination. »
Meanwhile, Canton Banks, Post-finance and many pension funds in Lucerne, Zug and Zurich have jumped on the miraculous money growth bandwagon. Post-finance talks about “democratization, »«access to the crypto market for everyone» and « milestones in our company’s history»
The Initiative Committee hopes to provide in the federal constitution that the Swiss National Bank (SNB) must hold Bitcoin as a reserve currency. If Switzerland and other countries follow such demands in the footsteps of El Salvador and the Central African Republic, the price of Bitcoin will rise to unimaginable heights according to the principle of “self-fulfilling prophecy.”
One of the main discussions for holding Bitcoin is its function as inflation protection. In fact, the purchasing power adjusted value of the dollar, pound, and euro (including its predecessor currencies), and the franc tend to zero within a 100 or 200 year period. Those who placed 1,000 francs under their mattress in 1850 and have never invested money in stocks, bonds or real estate for 175 years still have around 5% of their previous purchase power today.
For this very reason, long-term available funds are invested in actual assets such as Roche stocks to increase them on an inflation-adjusted basis. This does not require cryptocurrency, but it mainly brings hardworking people, products and services, from people who work in businesses, to the market every day, creating added value.
Cult-like organization
The original idea for libertarian Bitcoin enthusiasts was to escape state oversight, potential state bankruptcies, and the traditional monetary system. The goal was completely overlooked. Because it’s rare for anyone today to pay a butcher with a vacation, a hairdresser, a car or a bitcoin. Instead of establishing itself as a payment instrument, Bitcoin won as a pure speculative instrument that promotes the illusion of being worthless with thorough inspection, barely profitable, and quickly becoming rich without work.
Bitcoin is the largest bubble in financial history. It is reminiscent of 17th century tulip mania and ponge or pyramid schemes. They work as long as they find new fans to support and spread the system. Crypto-like crypto communities are highly networked with an army of influencers and an increasing number of crypto conferences. It ensures that the number of followers continues to grow.
The next price target for the year is the $180,000-$200,000 mark, as announced on a Swiss television program on January 16 by Bitcoin (Suisse) board member Luzius Meisser. He refers to analysis from his research department. However, it is simply impossible to determine fair value if there is nothing to evaluate, so I wonder what calculations this is based on.
The biggest long-term risk is threatening crypto fans through regulations, just like many cybercriminals, drug dealers and money launderers. However, with Paul Atkins appointed as the new SEC head, there appears to be a high possibility of deregulation at this point. He is considered a friend of the crypto industry.
This allows the community to continue gambling with frivolity. People often buy just because prices are rising. Because my neighbors created a pile of money. Because you might stand aside and miss something.
A few years later, Bitcoin is expected to reach the million mark. If the community continues to successfully recruit large numbers of followers and the number of crypto atheists continues to decline, achieving this goal is realistic and means that the biggest bubble in financial history has not burst. However, this does not change the fact that all Bitcoin in the world has zero intrinsic value.
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