Bitcoin reached new highs, but fell precipitously by $10,000 immediately after. This huge price fluctuation after the record is proof that bitcoin is in a speculative bubble, according to journalist Nastasia Hadjadji, who specializes in cryptocurrencies.
That’s it: bitcoin broke its all-time price record on March 5, 2024, at $69,147. This new record was established around 4 p.m. (Paris time), according to data from CoinMarketCap – but a little later, around 7 p.m., a bitcoin was selling for around $59,000, again according to site data.
Since then, the price of the cryptocurrency has risen again to settle around $66,000. In the cryptocurrency market, such corrections are not uncommon — but the recent intensity of these variations is impressive. How can we explain such a “windfall” of $10,000 in a few hours? What does he mean ?
Bitcoin, an asset ultra-speculative »
According to Nastasia Hadjadji, journalist and author of the book No Crypto. How Bitcoin bewitched the planet, these extreme developments are symptomatic of speculative assets. “ When there is a historic market peak, as we have just experienced, there are inevitably speculative phenomena “, she explains to Numerama.
Today, ” the brutality and unreasonable amplitude of this fluctuation illustrates that we are dealing with an ultra-speculative asset. Can we imagine a currency that collapses at this speed? A currency requires stability », she judges. “ We have proof of the dangerousness of this asset for traditional savers. »
Added to this is a problem of illiquidity, she observes. During the peak, many bitcoin owners who had purchased at lower prices took advantage of the opportunity to resell and cash in the difference.
But these significant financial movements, in turn, led to a sudden drop in prices. Platforms have been turned upside down by this wave of sales and withdrawals, including high-profile ones: “ there was congestion on the sales platforms to withdraw the money, notably on Binance and Coinbase, which were in great difficulty. »
Binance, the largest crypto exchange platform in the world, had to suspend withdrawals for a while, on March 5, before putting them back in place. On Coinbase, users saw their balance drop to $0 following a computer bug, and the value of bitcoin also suddenly dropped for a moment.
A self-fulfilling prophecy
However, the price of bitcoin could continue to rise – among the scenarios mentioned, there is that of a bitcoin at 100,000 dollars 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 a phenomenon occurring every 4 years: the halving of bitcoin.
This moment, which occurs very occasionally, causes the rewards given to bitcoin miners to be halved, creating more and more scarcity. However, this regular reduction in earnings would be “ a self-fulfilling prophecy, because this scarcity effect is one of the mechanisms that could have created this speculative phenomenon and this bubble », analyzes Nastasia Hadjadji.
The forgotten bankruptcies of 2022
Despite this, “ Today there is marketing which tends to enlist more and more people », notes the journalist, whether on social networks or from exchange platforms. “ There is a legitimate distrust of banking institutions, there is a fear of downgrading and a loss of purchasing power. » Bitcoin then appears very tempting 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 reshuffled the cards for a time, damaging the confidence of many investors in the ecosystem. “ I thought this helped to cool people down, and demonstrate the toxicity of the sector », continues the journalist. “ But here, bitcoin just needs to rise for the sirens to return. This industry is very sensitive to advertising, so I think FOMO [la peur de passer à côté d’une opportunité de gagner de l’argent, ndlr] plays to the fullest. With this sentiment and the rising price of bitcoin, it could convince people to invest. »
Despite all this, Nastasia Hadjadji advises “ keep a cool head » on untimely investments. “ Many crypto fans say ‘we were right’ », by ridiculing people who have doubted bitcoin in recent years. However, his strong comeback “ does not invalidate the toxicity of this active ingredient “, she says. “ It must always be considered as a political object. »
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