When the prophecy about Blockchain collapsed: Crypto winter has not ‘thawed’, investors still stubbornly believe that Bitcoin has a day worth of $ 100,000

In early 2021, an old friend named George called and convinced me to play crypto. Sending a series of blockchain expert podcasts and lots of analytical charts, George says he’s planning his finances around Bitcoin and doesn’t want his friends to be left behind in the digital revolution. After pondering and trying to figure it out myself, I decided to put down the money.

Then the cryptocurrency collapsed. George and I then had a very different conversation.

“Let me apologize,” George said in anguish as he watched Bitcoin lose three-quarters of its value. Crypto winter — an expected protracted recession that has yet to thaw.

Going back to the time when the market was excited, George convinced his parents to lend him $50,000 to invest. He kept his money on Celsius and now can’t get it back because the company has gone bankrupt.

“I’m really sorry, I’m so embarrassed,” George repented.

It seems that George has been through a lot of guilt and because of that, even the Bitcoin price recovery is not enough to help him feel more comfortable after a series of events, from Celsius bankruptcy to Sam Bankman-Fried arrested.

Still, George, after all, still believes in coins.

“ I believe Blockchain is a revolutionary development. In 10, 20, 50 years from now, we will have to look back and admit that Bitcoin was a great invention ,” said George.

A famous study from 1956 described how doomsdayists react to having their prophetic predictions wrong. Instead of acknowledging that there is no such thing as a deadly apocalypse, they simply pushed back the timeline of Earth’s doom. This is a prime example of “cognitive dissonance,” similar to what was going on in George’s head.

At a Midtown bar in New York, a group of young people were arguing about cryptocurrencies. Others blame the large number of “fluffy” investors in the market; Others point to a lack of transparency within many organizations. At this time, a man named Boris Friedman said that the market will recover soon in 3-5 years, no matter how scared people are.

Nearby, Corey Wilson quietly took a sip of wine. After losing money unjustly in the BitConnect scam, this guy still silently buys cryptocurrency every day in the hope of a strong recovery scenario. Rich Etienne, an engineer in Florida who lost about $100,000 in the Celsius crash, also has a good hunch about the market.

Previously, the famous “father” of the Stock-to-Flow model PlanB was confident that Bitcoin could reach the target of $ 100,000 by 2021. After an unsuccessful prediction, this man pushed back the timeline to next year. 2028 – when Bitcoin fluctuates between $100,000 and $1 million.

“For me, it’s a long game,” says PlanB.

According to experts, this collapse-defying mindset is often seen in gamblers. “People don’t want to admit defeat or face mistakes,” said Tobin Hanspal, assistant professor of finance at the Vienna University of Economics and Business.

For some, the idea of ​​decentralization of cryptocurrencies is exciting. They put blind faith, then one day witness the ‘bubble’ burst.

“Any operating system based on trust is unstable and can create bubbles,” says writer Chris Blec.

Frances Coppola has no inherent aversion to cryptocurrencies. The day Bitcoin appeared, this banking writer was curious about an alternative to the traditional payment system. However, in 2021, Frances Coppola became skeptical and decided to publish an article about the consequences of the decentralized cryptocurrency system.

“ Algorithms are built on the assumption that humans will never panic ,” Coppola writes.

These tweets caught the attention of Do Kwon, co-founder and CEO of Terraform Labs. At the time, Terra’s ultimate goal was to create a reliable $1 stablecoin that was expected to bypass any government, bank, or regulation. They see this as a “shelter” to avoid large risk fluctuations in the market.

While traditional cryptocurrencies are usually only traded on Coinbase and FTX, and subject to the same rules as banks and brokers, stablecoins are free to move, “in”, “in” out” DeFi platforms. It’s also much easier to speculate accordingly.

“I don’t argue about the poor on Twitter,” Kwon tweeted in response to Coppola.

In September 2022, Do Kwon became the figure behind the $60 billion cryptocurrency disaster. For Coppola, the collapse of TerraUSD has brought her mixed feelings.

2022 is a bad year for cryptocurrencies. Everyone blamed each other for the domino crash that spread to the entire market. Molly White, a prominent critic, argues that Bankman-Fried is a ‘scapegoat’ for crypto fans.

Legislators blame the regulator for failing to rein in FTX. Representative Tom Emmer of the Minnesota Republican Party accused US Securities and Exchange Commission Chairman Gary Gensler of “undercover trading … with people who are doing the wrong thing”. It’s all like a mess and especially, no one takes responsibility for themselves.

“The demise of FTX is a stark reminder that there is no such thing as a free lunch for investors looking to make a quick buck in a relatively new and unregulated sector,” said Jon Ulin, an expert on the industry. Personal financial advisor and CEO of Ulin & Co. Wealth Management said.

Looking further ahead, the responsibility may lie with a number of celebrities who use Bankman-Fried’s money to “paint” a bright future for FTX. This is no different from fraud and betrayal of trust, after this exchange filed for bankruptcy and was surrounded by a series of criminal investigation organizations. In addition, William MacAskill, Oxford University philosophy professor and best-selling digital currency author, can also be considered the “catalyst” behind the collapse of FTX.

In addition, the media helps to “cleanse” all nonsense about “effective altruism” and publish flattery stories about Bankman-Fried. The Bahamas government, blind American politicians, and the cryptocurrency industry are not spared either.

The disintegration of crypto-loving communities has left many scars, both literally and figuratively.

In February 2022, Emma Crudgington was surfing Twitter at her office when she stumbled across a fascinating NFT called Tasty Bones. Seeing how cute it is, and being heavily advertised, Emma decided to tattoo them on her arm.

Currently, the project is bankrupt. A Tasty Bones is currently only selling for about 50 USD instead of 12,000 USD as before.

“It’s funny looking back at it all,” says Emma Crudgington.

In addition to Emma, ​​Michael Novogratz, the billionaire owner of Galaxy Digital, also tattooed the coin LUNA on his arm to show respect and support.

“I am probably the only person in the world with both a Bitcoin tattoo and a LUNA tattoo,” Novogratz shared during the Bitcoin 2022 conference in Miami. The source of this excitement and also the reason why Terra is quickly becoming the second largest blockchain in Defi is the promise of a transcendent digital currency priced at 1 USD.

“I am officially a Lunatic,” he tweeted. “I’ll howl on the moon to show my gratitude to Luna for giving me a little something.”

Novogratz’s craze for Terra excites many. Kevin Newby, a former tech worker in Detroit, admits Novogratz was one of the reasons he overcame his skepticism and invested more than $200,000 in cryptocurrencies. After the collapse in May, this man almost lost all his possessions.

“I considered saving for a profit every year, then quit my job and bought a home in Virgin. The crash left me with nothing. I was forced to go back to normal life,” Newby told the WSJ.

This time, the tattoo reminded Novogratz of a past that was superficial. He admits that he is too hasty to forget that venture capital sometimes also needs to be slow.

By: Bloomberg Businessweek