What the Bitcoin Haters Continue to Get Wrong

I sometimes wish there were a way to trade when people say stupid things. If there were, I would have made a fortune over the last decade by betting on someone saying that bitcoin (BTC) was “essentially worthless” or some similar garbage every time its value dips, like some are saying now that it's at $30,000, down from nearly $60,000 about six months ago. The crazy thing, of course, is that these are the same people who said the same thing when bitcoin first hit the public consciousness, like when you could buy bitcoin for 9 cents in 2010, or when it was somewhere around $300 in 2012.

They were wrong then, they have been wrong ever since, and they are still wrong now.

I should say up front here that this doesn’t mean I don't believe BTC/USD can't go lower from here. Clearly it can and, in fact, circumstances make a continued drop more likely than a sudden bounce from current levels. Risk assets in general are under pressure, the Fed is reducing liquidity, and the dollar has been on a fear-based tear after Russia’s invasion of Ukraine -- all these things point to BTC falling further. However, for those of us who saw the utility of bitcoin early, the very fact that future moves can be analyzed and predictions can be made based on things like the future of risk assets, monetary and fiscal policy changes, and the relative strength of the dollar, tells us that the crypto is now all grown up.

It also hints at how ridiculous the “bitcoin is worthless” crowd really are. If it had no inherent value, what would any of that analysis matter? All of the above influences indicate that bitcoin does indeed have worth. It is a risk asset, for sure, and a volatile one at that, but far from being proof that it is worthless, that is precisely what gives it its value.

Speculation is as old as markets themselves, and traders will find something, anything, to speculate on. It doesn’t have to have long-term utility or inherent value to be tradeable. If it did, gold would be essentially worthless. Gold is, as I have said before, the Kardashian of assets: pretty to look at, fascinating to follow, but of no fundamental use to society. And yet the kind of people who trash bitcoin love the yellow metal, whose only value is derived from a combination of shininess, scarcity, and people’s belief that it is worth something. Bitcoin has the last two qualities and, while the math behind it may not have the same visual appeal as a bar of gold bullion, it is beautiful in its own way.

Sure, bitcoin is volatile, but its volatility is a lot less than the hysterical anti-bitcoin crowd would have you believe. It has lost around 34% against the dollar since the close on December 31 last year, a time span during which the Nasdaq tracking ETF QQQ has dropped 27% and the Japanese Yen has fallen 11% against the dollar. In other words, bitcoin is slightly more volatile than the Nasdaq Index and around three times more volatile than the Yen. That makes it a good trading instrument and doesn’t seem like something that is inherently worthless.

This is what the bitcoin haters have always got wrong, and still get wrong today. Cryptocurrencies have value because people say they do. People are prepared to swap other assets, such as U.S. dollars, for bitcoin and other cryptocurrencies, and that isn’t about to change any time soon. In the meantime, no matter where BTC/USD goes from here, those who understood this a decade or so ago and bought in when BTC was in the hundreds are still laughing, while those who earnestly warned us against buying bitcoin look more like fools every time they ignore their failure and repeat their earnest but unfounded belief that BTC is going to zero.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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