First, a mea culpa on something we got wrong.
On the “new asset” side, eventually reality catches up to speculative hype. 2022 was a reckoning for crypto currency. Many coins have been wrecked and while bitcoin still remains above where it was pre pandemic. It now exists in a different reality where a significant number of people have gone from being interested in it, to having their pants pulled down by it.
There are two distinct groups of crypto investors: a small group of true believers who invested early, know the technology inside and out, and likely have custody of their own coins offline in a cold wallet. Then there’s a large group of everyone else who wants (or wanted to) speculate later and took the fact that platforms existed, meant that platforms were safe to put their money onto. They didn’t bother to investigate further, nor could be bothered to. The average person does not want to be their own banker or custodian. The first group likely won’t go away, but the second group likely will go away because they’ve been burned badly by massive price drops and fraud. The second group disappearing will ensure cryptocurrency now stays on the fringes of finance.
That was written after bitcoin peaked around $68k US in 2021, before closing out 2022 at $16k US. As far as the first group, as the saying goes: never bet against the church. The second group may well have had their fingers burnt and disappeared, but there’s always going to be new money and new booms. We just didn’t expect it would be in the same “asset” after so many fingers got burnt. There will always be a group of people who want to gamble, or if we’re being charitable, speculate.
After a mild 2023, in 2024 bitcoin came back. In a big way. By late October 2025, bitcoin peaked around $126k US. In the lead up to that peak there was talk of a million dollars being a reality sometime in the future. Look on social media and you’d see pro bitcoin accounts talking of society being divided into bitcoin owners and the permanent underclass who made the mistake of not owning bitcoin. The price would go so high the rest of us would be left behind.
But then bitcoin suddenly started falling. And it kept falling. And the peak to recent bottom was a fall of just over 50%, which is near where it’s currently sitting. Bouncing around the US $66-68k mark. Some of those pro bitcoin accounts on social media went through an interesting progression as the price continued to fall. One notable Australian X account we kept an eye on fed their followers the following themes:
First “nothing has changed, but the price”.
Then “the bottom is in” but the price kept falling.
Finally, resignation about the fall, but “convinced we’ll see new highs in 2026”.
After things started flatlining in December and bitcoin showed no signs of immediate recovery, this person stopped posting about bitcoin completely. On the Rocketship toward $126k US, they wouldn’t stop posting about bitcoin, and potential million-dollar targets. When it turned ugly, no more discussion.
Which is an insight into social media. It’s now just like regular media. Accounts will clinically serve up more and more of what their followers are engaging with. As soon as the hype, hope, and excitement go away on that topic, things shift to the next hot or scary thing. In this instance, it moved onto something scary. AI and how it will create a permanent underclass by wiping out everyone’s job in the next three years.
But back to crypto and bitcoin. These falls weren’t meant to happen.
Under the Trump Administration, bitcoin and cryptocurrency should have seen endless sunny days. The President said the US would be the crypto capital of the world. The seas parted and many republican legislators, along with the regulators in the US began viewing crypto more favourably. There’s a number of crypto and bitcoin ETFs now available, from otherwise reputable fund managers. The President’s family even has its own crypto platform.
President Trump also pardoned the billionaire head of the world’s largest crypto exchange, Binance. Changpeng Zhao, was jailed after pleading guilty to allowing money laundering on the platform. Binance was also fined $4 billion. This occurred during the run up in bitcoin prices, and likely contributed to the mania. A big green light as Trump was seen as a light touch, and regulation loosened.
But maybe that’s the point. For the important people (not the retail investors) the real game is making money off the products and the trading, not holding the gambling tokens. Something we discussed in the first part of our video on investment beliefs last year. Some companies have no beliefs; they simply exist to let you buy or sell things for a fee.
As far as the bigger known bitcoin advocates, earlier this month the Wall Street Journal went looking for the answers behind the fall. And it concluded no one was certain on why the price of bitcoin halved in four months.
This time, there is no clear consensus. “If you ask five experts, you’ll get five explanations,” said Anthony Scaramucci, who served for 11 days as communications director during Trump’s first term and is among the best-known crypto bulls at his firm, SkyBridge Capital.
Either way, a bitcoin winter, as it’s termed, has arrived once again. For buyers in the recent run up in price, it’s painful, but it probably doesn’t matter as much to platforms making money from the trades, funds, and custody.
It’s clear now that with bitcoin, and other cryptocurrencies, the gains and losses are spectacular. And they arrive and depart with regularity. This reality spells out a couple of things. It’s not a reliable currency or medium of exchange.
Think about the concept of it being a currency. The volatility is such, you could sell your car, be paid in bitcoin and lose 10% of your principle before you’ve had a chance to register the changeover and pay stamp duty!
Nor is it a “safe haven” asset. This is a term that’s mostly used by people claiming bitcoin will be a safe place to hide out from geopolitical storms. Look back on this latest bitcoin crash. It occurred while President Trump threatened Greenland, while the existence of NATO was thrown into question, while the US arrested the President of Venezuela, and while there was an uprising in Iran that the US hinted it was very carefully watching.
People who want to hold gambling tokens shouldn’t believe stories that are told about them, nor should they concoct stories about why they’re holding them. People can make three choices about what they do with surplus funds: Invest, speculate, or gamble.
All three are legal, but all three are very different. Never confuse them.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
