5 min read
The mother of all weeks has seen Bitcoin in freefall. The biggest price drop since 2013 followed a WHO announcement of a global pandemic, and President Trump’s ban on flights between the US and Europe. Uncertainty gripped the financial markets, and sent cryptocurrencies plummeting along with other assets, stocks and bonds.
On Thursday, Bitcoin had its worst day in history. Its price dropped from $7,900 to $4,600 over 40%. It then continued to drop, reaching a low of $3,850.
While it’s bounced back to over $5,000 since then, the Fear & Greed Index is still at “extreme”—showing the market is still fearful.
But we’ve been here before right? Bitcoin has died approximately 380 times. And it’s still here. So is Bitcoin really dead this time?
Erik Voorhees, CEO of Shapeshift crypto exchange, thinks the idea is ridiculous.
“No, Bitcoin as a store of value isn’t dead just because it had a super shitty day,” he tweeted. “In the coming months the world will see what anti-fragile means.”
Voorhees has lived through plenty of “super shitty days,” since he got into crypto more than eight years ago. He’s also seen how quickly things can bounce back.
But many of the respondents to his assertion on Twitter disagreed. So did libertarian and Bitcoin Cash proponent, Roger Ver. He believes that it’s precisely this idea which has to be knocked on the head.
"Obviously it isn’t the end of Bitcoin, but it should be the end of the nonsense idea put forth by BTC maximalists that Bitcoin is a store of value because Bitcoin is useful as a store of value,” he told Decrypt. “The reality is that the only way anything can become a store of value is by having some other use case.”
No doubt about it, the market making industry—the institutional investors who provide essentially liquidity to the crypto industry—took a gigantic hit, pseudonymous Bitcoin maximalist Loomer told Decrypt. But he remains optimistic. “I think the bottom just got printed, we will probably consolidate in this range for a while as people finally get back to grips and normality,” he said. “As long as people in the world have money, Bitcoin will be around.”
Adam Back, cofounder of Bitcoin developer Blockstream also brushed off the recent tumult in the markets. “Bitcoin has been lower last year with a bottom around $3400, and is known for being volatile,” he said.
He pointed out that as well as the biggest loss, the cryptocurrency also saw its biggest gain.
“Yesterday we saw price appreciate rapidly by the biggest intraday gain in Bitcoin’s history from its bottom just below $4000 to over $5500 within 30 minutes. So I think it's safe to say Bitcoin isn't going anywhere,” he said.
Investor Dan Tapiero agreed, tweeting that Bitcoin was the only asset that could go down 50% in one day that didn’t need government intervention to stabilize its price. “It will be fine,” he said.
But not everybody is convinced.
On the other side of the equation, skeptics argue that this might be it for Bitcoin.
Bitcoin bear Peter Schiff tweeted, “With Bitcoin crashing below $4,000 I don't feel so bad about having lost all my Bitcoin. At the rate my lost Bitcoin are losing value soon the difference between having Bitcoin and not having any Bitcoin will be too small to matter.”
Bitcoin skeptic David Gerard told Decrypt that it's crunch time. "Everything bitcoin's ever done has been under the best possible circumstances. Coiners forget that literally the entire price history of Bitcoin—since it could first be said to have a price, in late 2010 or early 2011—has been in a conventional asset bull market."
The falling price poses further questions for the viability of Bitcoin’s economic model. It costs miners a lot of money in electricity bills to mine Bitcoin, and if it drops too far in value—then they might not be able to afford to keep supporting the network.
Bitcoin miners help to keep the network running. Image: Shutterstock.
Charles Edwards founder of digital asset management startup Capriole tweeted that, “Bitcoin miners are now unprofitable.”
As a result, he argued that Bitcoin miners will leave the network—which would make it weaker, and more vulnerable to attack. The hash rate is the amount of processing power being used to mine new Bitcoin. “Expect we hold (mostly) above $5,000, and then start to see [the] Hash Rate drop,” he tweeted.
But perhaps price isn’t everything. Charlie Shrem, host of Untold Stories, tweeted, Has Bitcoin changed from last week to this? Is the network broken? Has someone hacked it? No, Bitcoin is working, chugging along and growing!”
Meanwhile, Peter McCormack, host of the What Bitcoin Did Next podcast, told Decrypt: "My only thought right now is I never really care about price much anymore, all I care about is its existence, just by existing it is a win for freedom."
That’s maximalism and existentialism for you.
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