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Why Bitcoin is going down?

Bitcoin was one of the first cryptocurrencies, in fact it was not the first cryptocurrency at all, but became the first commercially successful cryptocurrency. This determined its continued success, at least bitcoin is firmly associated with the concept of cryptocurrencies.

Now, however, Bitcoin is suffering and its price is going down. And there are several objective reasons for this. After peaking at nearly $65,000 per Bitcoin (which was reached on April 15-16, 2021), its price has started to decline steadily and as of the end of May, it is down to about $35,000.

Many people attribute the fall in the price of Bitcoin to Elon Musk’s tweets and the fact that Tesla is stopping selling cars for Bitcoins. However, to attribute this only to Elon Musk is to attach too much importance to one person. A stable asset would never change its value so much because of one person’s tweets, which means that Bitcoin is based on speculation and its growth is a direct consequence of the financialization of the economy, that is, the dominance of the financial sector over the productive sector.

Returns on other assets are shrinking and investors are looking for new ways to make a lot of money. It is simply a speculative asset that is akin to a pyramid scheme. Financial pyramids can make you money, too, if you were ahead of the locomotive. But you will definitely lose money if you were at the end of the departing train.

It is important to understand that cryptocurrencies are first and foremost money.
At least that is how Bitcoin and other crypto-assets adepts position them. I said this back at the beginning of the Bitcoin rush in October 2020. But then I sounded like a dinosaur who just doesn’t believe in the future.

But no, all I have in my head is a cold calculation. Some analysts call Bitcoin the next generation cryptocurrency, Generation Z. However, me and my circle are also part of that generation, but I still do not believe in Bitcoin. It lacks several basic characteristics of money. I will say in more detail about that.

First, Bitcoin’s liquidity is questionable. Yes, you can sell it, but this asset changes its price too quickly.

Second, it is not used as a means of payment. There are too many commodities that you cannot buy with Bitcoin.

Third, it has actually become a security that is too speculative to be considered a long-term investment.

And the reason for Bitcoin’s fall is not Elon Musk’s tweets or statements by Chinese regulators. The reason is even more trivial and prosaic. Bitcoin investors, just like any other cryptocurrency, do not feel a foundation under its price, which is why any news will affect its price too much.

If you are willing to take a risk – you can invest, maybe you will be on the cutting edge of a new speculative wave. But if you are not too lucky or don’t understand the psychology of the masses too well, then the chance that you will lose money is much higher than what you can earn.

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