The first few months of 2021 made it look like it was going to be a great year for Bitcoin and perhaps even for cryptocurrency in general. Bitcoin’s price even surged to a new high of sixty thousand dollars at one point. By the time we get to December, it might turn out that it’s been a great year for crypto after all, but there have been a couple of unexpected bumps on the road during the past few months.
The first came when Elon Musk appeared on the American entertainment show “Saturday Night Live” and jokingly referred to Dogecoin – a comparatively small cryptocurrency that he’s been a champion of on social media – as “a hustle.” While it was obvious to most viewers that Musk was joking, the crypto markets didn’t take the joke well. Within a few hours of his appearance, the coin lost almost a third of its value, and the market as a whole was down. That triggered an ongoing price drop that eventually saw Bitcoin fall all the way to thirty thousand dollars per coin – still a huge figure, but half of where it was just a few weeks ago.
Like the other big cryptos, Bitcoin has been staging a slow but steady recovery during the past few weeks, but now another heavyweight commentator has weighed in. During an interview with Fox Business, the former president launched a furious tirade against Bitcoin during which he called it a scam and said he wants it to fail because it “competes against the US dollar.” Not content with that, he also voiced his opinion that regulators in the USA should take action against the cryptocurrency to prevent it from becoming any more popular. An hour after the interview ended, the price of Bitcoin dropped by 1.3% from $36,472 to $35,973. It’s not a huge wobble, but it’s a wobble nonetheless – and precisely the sort of wobble that shouldn’t be happening at this point in Bitcoin’s existence.
We’ve been here before with Trump and Bitcoin, and Bitcoin investors should be relieved that his voice isn’t as influential as it once was. When he spoke out against the coin in 2019, he almost single-handedly shaved ten thousand dollars off its value. At the time, former National Security Advisor John Bolton was believed to be pressuring his Treasury colleague Steve Mnuchin to outlaw all forms of cryptocurrency in their entirety. That hasn’t happened and isn’t likely to happen now the Democrats are in power, but their views are representative of an older, conservative core of people who either don’t trust or don’t understand cryptocurrency.
The fact that Trump doesn’t understand the principles of cryptocurrency isn’t all that surprising. Firstly, he’s admitted that he wants the US dollar to be the most dominant currency in the world, so his views are framed by American nationalism. Secondly, this is a man who once said that global warming was necessary because it was snowing in New York. Understanding complicated things isn’t exactly his forte. The problem in this instance isn’t so much what Trump said as the effect it had on the price of Bitcoin. When Musk talks about Bitcoin or cryptocurrency, we can almost understand why the price would move because Musk is a respected authority on the topic. Trump’s understanding of cryptocurrency is non-existent, and he’s no longer in a position to make political changes. What he says or does shouldn’t matter, and yet the market still appears to be sensitive.
As many of you will already know, Bitcoin isn’t a “true” competitor to the US dollar at all. By many definitions, it isn’t even a currency. It doesn’t have a unit of account. It’s not universally accepted as a means of payment and doesn’t provide a good store of value. It’s an alternative to conventional currencies, not a rival to any one of them specifically. This is the argument that’s increasingly being lost or missed in the press, and it’s part of the reason that so many people still lack a fundamental understanding of what Bitcoin and currencies like it really are. Unfortunately, that applies to many of the people who invest in it.
With so little understanding and so much nervousness, it’s inevitable that the price of Bitcoin will always be jittery. Bet on it at the right moment, and you could end up rich, but bet on it at the wrong moment, and you could make enormous losses. That’s around the same level of security that someone has when they play online slots, and it’s not a sound basis for making investments. The comparison isn’t an unfair one to make. In many ways, the complicated mathematical formulas that drive the production of Bitcoin are similar to the mathematics that underpin the online slots at Rose Slots Canada. These days you’ll even find that Bitcoin and Ethereum are accepted as valid forms of payment at a few online slots websites. You still wouldn’t go into such a game with the expectation of winning money, though, and that’s what’s supposed to differentiate them from investments. When you get that same sense of uncertainty from investing in Bitcoin, something’s seriously wrong.
It’s taken years to get the words “Bitcoin” and “cryptocurrency” into the consciousness of the general public. We’ve finally arrived at the point where the majority of people know what they are, even if they don’t understand how they work. Explaining how they work is the next step along the road and also the most difficult. Learning how cryptocurrencies work takes time and effort, and not everybody wants to commit that level of time and effort even when they’re willing to commit their money to invest in crypto. For as long as that remains the case, prices will drop whenever negative press coverage happens because investors who lack understanding will panic and dump their holdings. For those who are serious about turning Bitcoin into a stable, dependable currency, this situation cannot be allowed to persist for much longer. We’ve found a way to make Bitcoin popular. Now, we have to find a way to make it immune to the thoughts and words of the Donald Trumps of the world.