Bitcoin tumbled Monday to its lowest level since December 2020 as investors finally realized that cryptocurrencies aren’t the effective hedge against inflation that enthusiasts have claimed.
In recent months, the crypto crowd has been saying forget gold, forget silver. During tough economic times, crypto’s the place to park your money.
Not so much.
And there’s a reason for that.
Most cryptocurrencies have no inherent value. They’re worth basically what owners say they’re worth, which is a prime example of what’s known in the financial world as the “Greater Fool Theory.”
That’s not to say you won’t make money gambling on crypto, but it’s just that — gambling, not investing.
Bitcoin fell Monday to as low as $22,611, according to CoinDesk. That’s down more than 20% from Friday and a 67% decline from its November high of $68,991.
What we’re talking about here is roughly $2 trillion being erased from the crypto market since late last year. Since Saturday alone, about $200 billion has gone adios.
Things weren’t helped by news that a crypto company called Celsius Network paused withdrawals Monday “due to extreme market conditions.”
The company seemed worried about a run on the bank, as it were, and was blocking users from getting their money back.
If that spreads to other crypto firms, all bets are off.