Bitcoin hit a new high, but then immediately fell below $10,000. According to Nastassia Hadjadji, a journalist specializing in cryptocurrencies, this huge price swing after the record is proof that Bitcoin is in a speculative bubble.
That’s it: Bitcoin broke its all-time price record at $69,147 on March 5, 2024. This new record was set around 4 pm (Paris time), according to data from CoinMarketCap – but a little later, around 7 pm, one bitcoin was again selling for around $59,000, according to the site’s data.
Since then, the price of the cryptocurrency has rebounded to settle around $66,000. In the cryptocurrency market, such corrections are not uncommon — but the recent magnitude of these variations is impressive. How can we explain such a “windfall” of $10,000 in a few hours? What does it mean?
Bitcoin, an asset Hyper-speculative »
According to journalist and author of the book Nastassia Hadjadji No crypto. How Bitcoin Captivated the Planet, these extreme developments are characteristic of speculative wealth. ” When there are historical market tops, as we have just experienced, there are inevitably speculative events. “, she explains to Numerama.
Today, ” The brutality and unreasonable amplitude of these fluctuations shows that we are dealing with hyper-speculative assets. Can we imagine a currency collapsing at this speed? Currency needs stability », she judge. “ We have evidence that these assets are risky for traditional savers. »
Added to this is the problem of obsolescence, he observes. During the peak, many Bitcoin owners who bought at low prices took advantage of the opportunity to resell and cash in the difference.
But this significant monetary movement, in turn, led to a sudden drop in prices. This wave of sales and withdrawals has turned the platform upside down, including high-profile: “ Selling platforms were crowded to withdraw money, especially Binance and Coinbase, which were in dire straits. »
Binance, the world’s largest crypto exchange platform, had to temporarily suspend withdrawals on March 5, before putting them back in place. On Coinbase, users saw their balances drop to $0 following a computer bug, and the value of Bitcoin also plummeted for a moment.
A self-fulfilling prophecy
However, the price of Bitcoin can continue to rise – under the mentioned conditions, a Bitcoin is worth $100,000 in 2024. This possibility is supported by three main arguments: the arrival of financial products (ETFs) Bitcoin, a favorable macroeconomic context, with the end of the bear market, and finally, the approach of an event that occurs every 4 years: the halving of Bitcoin.
This moment, which happens frequently, causes the rewards given to Bitcoin miners to be halved, creating an increasing scarcity. However, there will be a regular decline in earnings.” A self-fulfilling prophecy, because this scarcity effect is the mechanism that could have created this speculative phenomenon and this bubble. », analyzes Nastassia Hadjadji.
2022’s Forgotten Bankruptcy
Despite this, “ Today there is marketing that tends to recruit more and more people », the journalist notes, whether on a social network or from an exchange platform. ” There is legitimate mistrust of banking institutions, fear of downgrade and loss of purchasing power. » Then Bitcoin looks very attractive with its promises of easy profits. ” But what is sold as financial inclusion actually exposes people to speculative phenomena. »
The spectacular bankruptcies of Terra and FTX in 2022 changed the cards for a while, damaging the confidence of many investors in the ecosystem. ” I thought this helped cool people down and show the toxicity of the field », the journalist continues. ” But here, Bitcoin only needs to rise for the sirens to come back. This industry is very sensitive to advertising, so I think FOMO (fear of missing out on an opportunity to make money, editor’s note) is at play. With this sentiment and the rising price of Bitcoin, it can convince people to invest. »
Despite all this, Nastasia Hadjadji advises “ Keep a cool head » On premature investment. ” Many crypto fans say ‘we were right’ », mocking those who doubted Bitcoin in recent years. However, his resounding comeback ” This does not invalidate the toxicity of the active ingredient “, she said. ” It should always be treated as a political thing. »
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