To cryptocurrency true believers, Bitcoin is the ultimate store of value, the most solid hedge against the rampant inflation manufactured by reckless central banks and their money-printing. To skeptics, the crypto world as a whole is a mirage whose massive run-up past $2 trillion was simply the speculative byproduct of the extraordinary amount of easy cash that’s been sloshing around in the global economy — in effect, a big bubble.
Both of those theories are about to face their biggest test yet.
Bitcoin, the original cryptocurrency, emerged more than a decade ago out of the ashes of the global financial crisis as a bypass to the banks and government agencies mired in Wall Street’s great calamity at the time. The digital token steadily gained a following, inspired a rash of wannabes and endured some wild rides. But it wasn’t until the next big crisis, Covid-19, that the market really took off.
Crypto exploded after March 2020, when the Federal Reserve and Congress unleashed trillions of dollars’ worth of stimulus to blunt the pandemic’s economic blow. A bunch of that cash made its way to digital assets, turbocharging prices. Bitcoin soared 305% in 2020 and notched another 60% the following year, topping out at a record of almost $69,000 in early November. Since then, though, it’s been on a relentless slide, weighed down in large part by the central bank’s hawkish pivot.
Fin24 and Bloomberg