Why Bitcoin Boomed and Dipped, and What's Coming Next

June 30th 2021

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This Slogging thread by Justin Roberti, Anthony Watson, Akasha Rose, Limarc Ambalina, and Bellememelleb occurred in slogging's official #technology channel and has been edited for readability.

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In a new approach to collaborative writing, we invited everyone to build this article one line at a time. We asked that contributors not contradict the line that comes before. Here is the result -- read the quoted lines as a continuous piece.

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"In order to have any insight into what drives the value of the world's most famous cryptocurrency, Bitcoin, you first need to..."

"(account for)...the blowhole of a whale. Money drives the value and lots of it. It is heavily manipulated because it is unregulated and still relatively low capitalization."

"Bitcoin and cryptocurrencies, although they are using high amounts of energy, create greater efficiency because they are taking out the middle man. We are creating a future that is peer to peer and democratised, and as that future becomes more democratic, people will choose energy sources that are for the good of all rather than the wealth of the few."

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"Yet the coin has continued to slide driven by the perception that BTC is bad for the environment. The reality of the concern is irrelevant -- the perception is an excuse to regulators that already want to more closely control the industry, such as China's clampdown on mining."

"However, the role of influencers has been a matter of some concern, with celebrity investors like Elon Musk seemingly in part driving a recent severe dip below the $30k mark with his announcement on Twitter that Tesla would no longer be accepting Bitcoin purchases."

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"I don't think a greater gaslighter than Elon Musk has ever lived. How must he feel having trillion-dollar markets dance and dip to his every word? What it shows is how sensitive our social media based culture is to positive feedback, and how the value of cryptocurrency is really pegged to the emotions and whims of the people who desire or fear it."

At the moment, bitcoin and crypto still remain ambiguous buzzwords in the eyes of the general public. Those who don't know how blockchains work or what separates cryptocurrency from digitized versions of fiat currency are reticent to invest in or believe in it. Meanwhile, some play on the FOMO and target the uninformed looking to join the ranks of crypto millionaires but don't know how.

"The rise of the meme coins got me excited. Finally, people are waking up to how the value we give to certain human activities but not animals, the environment, caregiving, and even life itself isn't a law of nature - it's a human construct. If coins named after a dog can be worth billions then in the new world order we can totally reassign and redesign what human activities we consider valuable to a thriving economy."

In a way, the rise of dogecoin truly showed the potential of crypto to give power back to the masses. If we want to make a statement or a joke of crypto, we can support coins that were started as a joke.

The time where this becomes detrimental is that just because the masses want to play, doesn't mean that the whales (cough *Musk*) won't come swimming around to see if there is a gain to be made.

"But, often to the chagrin of established investors, the group think movements of the new retail investors empowered and unified by social media can create unexpected impacts in the market. Doge's rocket path to the moon (or at least $1+) is fueled partially by "fintok" (fintech + tiktok). Gamestop owes its good fortune to Reddit. "Dumb money" is not so dumb in 2021."

"Yes and do not forget AMC. The AMC Apes are stomping around Wall Street as I type."

"The glory and tragedy of crypto investing is that it is still in its infancy. Investors are ready -- even anxious -- for a global digital currency with proven stability, but 10 years of use is not enough to prove the enduring value of Bitcoin.

It remains to be seen if the "great mainstreaming" of crypto is more reflective of lost faith in traditional finance and fiat currencies (USD in particular) and less reflective of dedication to the principles of Bitcoin.

Many institutional investors have treated Bitcoin as a safe-haven asset to protect against inflation and devaluation in fiat. However, as soon as BTC dipped, some investors have pivoted to gold -- which by comparison has a 10,000-year history of retaining generational and intergenerational value. Bitcoin may be worth more than gold today, but no one can say with certainty that it will be the case 10 years from now let alone 100 years from now because there is no real precedent.

All crypto investing is still speculation at heart, in a community of true believers, based on a coin staked in the faith of its users."

"The traditional economy is falling. Billionaires don’t know where to inverst their money because the only perspective is real estate but it is over-regulated with countries' laws. Now it is a huge opportunity for cryptocurrencies to reach adoption. To reach the tipping point of change we need cryptocurrencies to be trustable. Should be a mixt between banking usual design with recovery and biometrics access to private and public keys."

"The rise of bitcoin is like the ancients baking bread. The market rises, you smack it down. Ultimately, a light and fluffy but durable blockchain-based global society is ready and smells good enough to eat! It may seem like nothing at the time,but 10,000 years later, everything has changed."

Cover image created using images from Darwin Laganzon and Gerd Altmann from Pixabay 

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