Could Bitcoin Crash Below $10,000?
Crypto winter blew a chill over the industry this year, and based on recent events, there is every indication that things will get colder. Macroeconomic forces – notably more interest rate hikes and energy spills in Europe – are poised to further hammer crypto prices, while regulators are eager to kick the industry while it’s down. And in another psychological blow, Bitcoin prices fell below $19,000 for the first time in nearly two years as the last of a late summer rally ended.
All of this has led to murmurs on crypto Twitter and elsewhere that the current winter is likely to enter a darker period before it ends. In particular, some are muttering about a return to Bitcoin below $10,000. These include one analyst, who accurately predicted the market bottom in 2018, saying that sub-$10,000 Bitcoin is a real possibility by the end of the year, especially if Europe’s economic and energy crises does not decrease.
If Bitcoin falls below $10,000, then what? While Bitcoin’s predominance in the crypto world isn’t what it used to be, it’s still by far the most valuable digital currency, and its price remains a critical gauge of confidence in the industry. If Bitcoin suffers another major collapse, we can expect a wave of panic selling of other digital assets, more layoffs, and the familiar chorus of crypto-haters in the media to become louder and more complacent.
This would lead to a sense of despair and discouragement among many casual investors, but for a smaller set of crypto builders, Bitcoin under $10,000 will likely lead to a different response – namely, “So what?” That’s because longtime crypto veterans have been through three or more crypto winters in the past, and have understood that the industry is highly cyclical where periodic hype cycles (including last year’s frenzy when Bitcoin went north of $60,000) are offset by downturns like the current one . They have also seen that, even in the coldest moments, Bitcoin never sinks to the lows of last winter and always bounces back faster and higher than ever before.
History is never a perfect predictor of the future, of course, and blind faith is not enough to sustain an industry. But I can’t help but share the view of longtime crypto believers. This is partly because I have seen the cycles myself and how each crypto winter has led to a renewed focus on technology which in turn has produced a new wave of product improvements. When the current winter is finally over, I fully expect to see things like stablecoins, NFT platforms and crypto games take a big leap forward.
Finally, there are simply too many high-caliber people in crypto today for the current winter to continue for much longer. In previous cycles, it has been up to a relatively small number of diehards to maintain the crypto flame during downturns. Today it is different. There are thousands of people at prestigious companies like PayPal and Blackstone who have staked their careers on crypto, and many more coming out of university who have taken courses in blockchain that didn’t even exist a few years ago. They will be instrumental in building the engine of crypto’s next bull run. All of this means that in the long term, Bitcoin falling below $10,000 (if it happens) will be seen as a temporary blip, not a disaster.
If you’re curious about some of the people laying the groundwork for the next bull run—or just want to breathe some crypto optimism—there are still tickets available for Messari’s Mainnet Conference, taking place on the 21st-23rd. September. Fortune is a media partner, and I’ll be there with my Ethereum-savvy colleague, Taylor Locke. Come and say hello.
Jeff John Roberts
[email protected]
@jeffjohnroberts
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FOMO NO MO
“None of the plaintiffs are terrorists…Each is an American who just want to to engage in perfectly legal business in private.” This quote is from a complaint filed by Coinbase employees and Ethereum developers who are sue the US Treasury Department over their decision to impose sanctions on the crypto privacy service Tornado Cash.
The sanctions, which were imposed in August, are notable because regulators did not target the crypto wallets of individuals or companies – as is common practice – but instead the smart contracts that allow Tornado Cash to operate.
As the plaintiffs point out, this constitutes a prohibition on the use of parts of the software code. The case, which is being funded by Coinbase, centers on whether the Treasury has exceeded its authority and whether Prohibition Code violates the First Amendment.
FINANCIAL STATEMENT
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IF YOU DON’T KNOW, CRYPTO
The crypto scene is a very tribal environment. There are Bitcoiners, the Ripple-affiliated XRP army, Shiba Inu devotees and so on. But did you know that there is also a tribe for those who reject crypto altogether? They are called “non-coiners,” and they spend their time ridiculing crypto as a scam on Twitter (and in person). And last week, no-coiners and other crypto-haters gathered at a first conference of its kind with the bland title of Crypto Policy Symposium.
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