Bitcoin’s making headlines again, soaring past $42,000 and marking a remarkable 150% surge this year. But along with this price surge, familiar figures have reappeared in the financial landscape: the promoters, the enthusiasts, the ones hyping up the cryptocurrency market.
In 2021, these voices were loud, touting crypto as the golden ticket to riches, especially during a time when individuals were receiving government aid and eyeing potential financial windfalls. Fueled by the fear of missing out (FOMO), the hype around crypto peaked. However, when Bitcoin’s price plunged from its highs above $60,000 to under $20,000, these voices quieted. Some even faced embarrassment due to various crypto-related mishaps, yet many remained steadfast in their bullish stance on Bitcoin’s future.
Will history repeat itself? Signs suggest a resurgence of FOMO among retail investors. The recent price rally is linked, in part, to forecasts of institutional crypto investments and the anticipated approval of spot Bitcoin ETFs by the SEC. This surge has reignited retail interest, as seen in Robinhood’s reported 75% spike in crypto trading volumes from October to November.
While there’s acknowledgment that Bitcoin’s value might continue to climb and potentially impact the financial landscape, skepticism arises when an investment becomes akin to a fervent belief. Some voices in the crypto space, like Devin Ryan from Citizens JMP Securities, bring rationality to the table. Ryan highlights the massive scale of the ETF industry and the potential for significant market cap expansion should large asset managers like BlackRock allocate to a Bitcoin ETF.
The bottom line? The current hype around Bitcoin and its role in finance might indeed lead to substantial growth, but caution is necessary when belief in an asset veers into the realm of faith, particularly when profits are at stake.
