Bitcoin has recorded its largest monthly loss since June 2022, pushing it into a bear market as the euphoria over cryptocurrencies after Donald Trump’s election win faded.
The price of bitcoin fell by 17.5% in February, the biggest monthly drop since June 2022, and its eleventh worst month in the last decade, as risk-off sentiment gripped financial markets.
The world’s largest crypto asset ended February at about $84,252 (£67,010), having hit a three-month low of about $78,273 during trading on Friday.
Bitcoin has now dropped more than 20% below the record high of $109,071 set in mid-January, which puts it into a technical bear market.
State currencies are backed by the military and police of their respective countries. You can criticize that all you want, but that gives them an actual value everyone can agree on since the punishment for not agreeing is severe.
Doesn’t really matter if there is enforcement, something is worth whatever someone is willing to pay for it.
If someone is willing to pay $100k for 1 Bitcoin then that is what it’s worth.
If someone isn’t willing to pay $100k for a piece of property in Idaho, the police can’t force you to pay that much.
Bitcoin is climbing again today because Trump reaffirmed his intention to create a US cryptocurrency reserve. If state currencies have value because they are backed by the military, wouldn’t this give the same source of value to these currencies? I don’t think the US isn’t going to be happy with outside entities messing with the value of their assets.
If you ever needed further proof that crypto is a grift…
Sure, in regards to Trump, you can criticize that all you want, but it doesn’t detract from cryptocurrencies becoming more legitimate per your own criteria.
Not exactly?
The US uses its military to enforce the US dollar status as the global reserve currency. Libya tried to sell oil outside the US dollar market and look what happened to them.
Unless Trump starts using the military to enforce Bitcoin value it still won’t have the same status as a currency.
You make some interesting parallels. While Bitcoin is not mined from the Earth like oil, it is similarly mined all-around the world and not just in US jurisdictions. If another country tried manipulating Bitcoin to crash or pump-and-dump after the US becomes a major stakeholder it would be interesting to see how the US responds.
Again, I’m not speaking in favor or against Trump, just exploring the facts.
Yes, but even if the US started militarily enforcing bitcoin mining, is the US trying to control the value of Bitcoin, or is it trying to control the value of Bitcoin in USD? Is the US treating bitcoin like a commodity that it needs to control (oil, gas) or like a currency?
Those are both great questions. Of course, I can’t predict how all that will shake out. However, to bring it back to my original point, I think either hypothetical will increase the legitimatecy of Bitcoin and other cryptocurrencies.
The military and police is not what gives currency it’s value. A country’s currency is valued based on it’s usefulness in the global economy, not based on how many ships in its navy or planes in its air force.
We know the value of a currency based on the exchange rate to all other currencies, which you can see at any exchange.
Similarly, Bitcoin’s value is based on how useful it is in the global economy. We know the value because we can see the exchange rate to all other currencies on any exchange.
The only real difference is that fiat currency is a database of money backed by a bank, protected by police and the military while Bitcoin is a database of money backed by mathematics and processing power.
It’s silly to argue that Bitcoin doesn’t have actual value when you can simply look at an exchange and see the trade volume and price to know that that isn’t true.
The US dollar ultimately has power because that is what it takes to pay taxes in the US. You want to do business in the US? Uncle Sam gets his cut, and he only accepts greenbacks. Same with the EU, UK, China, and every other major currency. If you don’t give Uncle Sam his cut, you’ll go to jail or wake up to 110,000 tons of American “diplomacy” plus fleet escort sitting outside you main port.
Ultimately the economic power of a country is backed by the state’s power to defend it. That’s why the USD stands as the global reserve currency instead of something like the Lebanese Pound or the the Kiribati dollar.
Yes, that’s just extra reasons why the USD is more valuable/more dominant/used as a reserve currency.
The point was that saying Bitcoin doesn’t have actual value because it doesn’t have a military isn’t true. You can see the actual value on any exchange, just like every other currency. The value of a currency is related to its use in trade, even countries without a military have currencies with value.
The fact that the USD is more valuable or used as a reserve currency doesn’t mean that other currencies (including bitcoin) don’t have value.
Yeah! Like meme stocks or beanie babies.
People don’t even understand the value of an immutable digital object and how it never existed before bitcoin either. They can’t wrap their head around that having some inherent value even if small, and how that can transform the world, even if not bitcoin specifically
People recognize the value of digital objects only when they lose access to something like their e-mail or main social media account.