Robert Steinadler, 9 months ago
The South China Morning Post featured an article citing Chinese state media that Bitcoin is going to zero. Since the market is in full bear mode this kind of pitch seems to be appealing and also frightening to investors. When the market is tanking it seems more plausible that we are going to see new lows and when it’s pumping most investors are anticipating new highs.
This raises a few questions: Why would anybody think that Bitcoin could go to zero and why is this outcome not very probable?
The Chinese government is seeking to contain cryptos for a single reason: Control. One thing that is problematic for the communist party is capital flight. The state can control cash flow through service providers and bank accounts up to a certain point, but when people are using Bitcoin, they effectively can opt out of the system.
Another factor is the energy crisis that we are witnessing that was already looming last year and eventually led to the decision to ban Bitcoin mining in China. Until May 2021 when the ban came into effect, China was the world’s center for mining businesses. The hash rate dropped and the price crashed only to recover a few months later and print an all-time high of about $69.000 in November 2021.
Needless to say, every statement about Bitcoin that comes from the Chinese state media should be taken with a grain of salt.
The published article stressed that Bitcoin has no intrinsic value and is based on pure speculation. Once investors would lose faith BTCs price is going to zero the article continued. According to the report, a Bitcoin ban in other countries could create an event that eventually leads to a massive loss of trust and to a huge sell-off.
This sounds reasonable and at the same time, it does not. China’s own history with Bitcoin has already proven that even if a major economic power is going against the network, it does absolutely nothing if price and hash rate is measured on a larger time scale.
The ongoing effort in the US and the EU to regulate the market in the most favorable way for consumers, investors, and business also point in a different direction. The UK Treasury even announced that the country would like to become a global crypto hub. Does this sound like a harsh policy that will involve banning Bitcoin and other cryptos?
Bitcoin can still go to zero. Not necessarily because of the reasons the communist party wants us to believe. Keep in mind that there is also a chance of Bitcoin going to a million. The thing is when you start putting price tags onto something there is always a chance that this will be the outcome. The probability of Bitcoin going to zero is very low, to say the least.
The same can be said about BTC going to a million. The reason why those statements that have been made in that article might seem appealing despite being proven wrong is psychological. The war in Ukraine, an energy crisis, inflation, and perhaps even a recession make it more plausible.
But that type of thinking does not make it a probable outcome. It seems that FUD is more appealing during bear markets.
Mar 24, 2023
We must admit that we like the artwork better than the campaign. Greenpeace USA had 'art activist' Benjamin Von Wong create a sculpture. Made from waste metal, it's called the Skull of Satoshi. It's supposedly highlighting Bitcoin's 'record of climate destruction'.
Mar 21, 2023
It's nice for every BTC hodler to see the price go up. But for Bitcoin miners the recent pump - in fact, one of the best weeks in Bitcoin's history - is more than just fun: it's existential. Bear market prices and high electricity costs have hurt them hard in the past 12 months. Finally, the tides seem to be turning.
Mar 20, 2023
Balaji Srinivasan, the former CTO of Coinbase and author of The Network State, has made a bet of 1 BTC and $1 million on whether the US will experience hyperinflation. Only if BTC will reach $1 million by June 17, Balaji will win this outrageous bet. What has he been smoking?
Sign up to stay informed via our email updates