Bitcoin died ... again

When crypto prices start to drop (like they have in May 2021), people start talking and writing about the end of Bitcoin. It happens every. single. time. There’s even a website for tracking how many times Bitcoin has died.

But … Since the first 400-or-so times Bitcoin died in the media it also:

• Reached an all time high over $50,000.

• Has been adopted by hedge funds, banks and other investors along with it's growing mainstream presence.

• Contributed to the IPO of Coinbase, a company all about crypto.

• Caused governments to consider, update and pass regulations for the crypto-industry (the U.S. is even reportedly considering their own U.S.-backed digital dollar).

• And inspired this newsletter.

With all that good news … What’s going on with prices?

There are some big personalities impacting the market … When Elon Musk tweeted about Dogecoin a few months ago, the memecoin’s sales exploded. When he implied that Tesla would stop accepting Bitcoin as payment and expressed uncertainty about the viability of the market in the long term, Bitcoin plummeted. Musk later clarified that Tesla would hold its shares, but the markets had already reacted.

The chart below shows how big of an impact Musk's comments have had on the rise and decline in the market over the past few months.

Equity markets are playing a big role … Mass adoption has led to a new correlation between Bitcoin and equity markets. It and other cryptocurrencies have joined the stock market in the U.S. and in countries like South Korea, making the coins more susceptible to market fluctuations. Now when there’s a sentiment change in the stock market, holdings that are seen as risky like crypto can fall fast.

Its an asset now … Goldman Sachs is considering Bitcoin an investable asset with “its own idiosyncratic risk” because of its newness to the market and its stage of early adoption. Along with identifying it as a new asset, they've also aligned Bitcoin more closely with penny stocks that rise and fall rapidly versus an asset like gold that Bitcoin has been compared to in the past.

And there are a lot of people who aren't panicking … Wait, what? Yes, there’s been a dip and many people who are new to the crypto market are in a solid state of freak out over the upheaval. But seasoned crypto HODL-ers know that fluctuations in the market are nothing new. A few months ago speculators were discussing the possibility of a crypto bubble and I covered why markets have bubbles and crashes in this newsletter. As prices drop some people are buying the dip, others are waiting it out and some are selling for profits when they can get them.

So while things look wild right now, I’ll be holding what I have and riding the rollercoaster. Bear markets happen, just like bull markets and selling at these prices would result in a loss for many investors.

Instead of stressing about prices, you could use this time to learn more about the exciting things going on in the world of crypto. Like decentralized finance (the subject of an upcoming newsletter) and all of the new and interesting ways people are using blockchain technology to revolutionize industries.