TThe virtual currency crash is here again. And it’s as brutal as ever. In just six weeks, more than $1.2 trillion has evaporated from the crypto market cap. This drop took Bitcoin back to levels last seen in April. The world’s largest cryptocurrency briefly fell below $90,000 this week, losing nearly a third of its value from its October high.
The key to understanding cryptocurrencies is that they have no “value” in an economic sense. It generates no income, has no productive capacity, and pays no dividends. Unlike national money, it is not backed by a tax base or fiscal authority. It’s not cash flow that drives prices up, but expectations, the expectation that someone will validate today’s valuation tomorrow. If sentiment deteriorates or people withdraw their funds, there is nothing to stop cryptocurrencies from falling. Prices do not correct and collapse. In 2023, MPs rightly said that crypto trading in the UK should be regulated as a form of gambling, but this request was rejected by the then Conservative government.
Cryptocurrency volatility is structural, not random. The Financial Times reported that investors have pulled out of cryptocurrencies as speculative assets are shunned globally amid concerns about the soaring price of AI and trends in US interest rates. But while the crash is global, the UK is uniquely vulnerable to its aftermath. No other large economy has so thoroughly hollowed out social mobility while promoting the myth of entrepreneurial flight to young people. It’s no wonder, then, that Brits are more likely to be interested in cryptocurrencies than their European counterparts.
The regulator has warned that too many young people in the UK are turning to cryptocurrencies, often taking on debt in the hope of “winning big”. Britain has effectively become a one-shot society. It’s a place where millions of people continue to seize any chance of escape, however illusory, as wages stagnate and housing unaffordable. American rapper Eminem captures this spirit in his hit song Lose Yourself, which opens with the opening line: “Look, if you had one chance, or just one chance, to grab everything you ever wanted…would you grab it?” For a generation locked out of asset ownership, cryptocurrencies are on the market as that “moment.”
In many ways, this is the clearest symbol of a faltering economic system, a promise of freedom built on an asset class whose status depends on decisions made in Washington. Cryptocurrencies rise and fall with the NASDAQ. The dollar system is their invisible plumbing. And its value is determined by the White House. But the political right sees the current crisis as an opportunity. They sell cryptocurrencies to the masses for treasonous empowerment.
Once disparaging Bitcoin as “baseless,” Donald Trump is now relishing his role as “crypto president.” Under Mr. Trump, cryptocurrencies have become a mechanism of patronage, deregulation, and self-enrichment unprecedented in modern American politics. Joe Biden’s attempts to regulate crypto businesses that have provided avenues for fraud and money laundering have been watered down.
People on the political right who want to be supplicants to President Trump’s power, whether it’s Argentina’s Javier Millei or Britain’s Nigel Farage, are now actively embracing cryptocurrencies. This allows them to pose as rebels on behalf of a “rigged” system while pandering to Trump, and accept donations via anonymous digital payments to prove a point. Cryptocurrency is not the end of money politics. It is nothing but the latest way for the powerful to profit from the powerless.
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