Crypotocrash Notes on an interesting day - Paul Krugman

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Crypotocrash Notes on an interesting day

Paul Krugman

Feb 5

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First, today’s price action shouldn’t change your view about Bitcoin’s usefulness or lack thereof. If, like me, you consider the whole thing a delusion — BTC isn’t a medium of exchange, nor is it a reliable store of value — then you already knew that and the fact that we seem to be having a Wile E. Coyote moment isn’t information about the fundamentals. (There are no fundamentals.) If you have some story about why this aging financial innovation is actually useful — do tell — you should HODL through the panic.

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Second, the fact that BTC is now lower than it was before the 2024 election is significant in two ways. It shows the limits of political favor — all the boasts about making American a crypto superpower, all the deregulatory talk and pardons for cryptocriminals, in the end couldn’t defy gravity.

But it also means that everyone who bought Bitcoin in the belief that Trump would make Bitcoin greater than ever has lost money, in many cases a lot of money. So this is another case of ETTD: everything Trump touches dies.

Finally, this crash may have political consequences. At least some young men supported Trump because they believed that he would enhance their crypto investments, and have remained favorable because he seemed to be delivering. I don’t know how many bitterly disillusioned bros there will be now, but there will be some.

[bucolic_frolic]

1. Secondary stocks that are part of crypto or even AI have been falling for months

Cleanspark, Big Bear AI, MARA Holdings, even cool tech like SoundHound. Crypto Bros. have some 'splainin' to do