The first rule of Bitcoin writing is: don't write about Bitcoin.
The tale of the world's most well-known cryptocurrency is incredibly fast-paced, and its supporters will soon line up to tell you that you're completely incorrect.
But we must write about it since the last 24 hours have been disastrous for the cryptocurrency's grand dame - even by Bitcoin standards.
I'll focus on Bitcoin here, but if you're a crypto follower, you'll know the entire industry is in crisis, to put it gently.
What is going on?
The tale of the world's most well-known cryptocurrency is incredibly fast-paced, and its supporters will soon line up to tell you that you're completely incorrect.
But we must write about it since the last 24 hours have been disastrous for the cryptocurrency's grand dame - even by Bitcoin standards.
I'll focus on Bitcoin here, but if you're a crypto follower, you'll know the entire industry is in crisis, to put it gently.
What is going on again?
As a result, even the most wealthy investors are less free with their funds. And many ordinary investors - not wealthy hedge-fund owners or businesses, but regular people like you and me - have less money to invest in anything.
In these uncertain times, many people believe that investing in something as volatile and unpredictable as cryptocurrencies is a risk too large.
Because it is unregulated and unprotected by financial regulators, if you invest in it with your funds and it loses value or you lose access to your crypto wallet, your money is gone.
Why now?
Last month saw the fall of two relatively lower-profile but nonetheless significant coins, which shook market confidence.
As a result, more people are electing to sell their homes.
Because Bitcoin's value is proportional to its desire, the more individuals who sell it, the less it is worth. This causes more people to sell since they can see the value falling... and the cycle continues.
Bitcoin, unlike other more traditional assets, has no inherent worth to back it up - there are no walls and mortar, revenue streams, or underlying businesses, according to FT markets editor Katie Martin.
"The price is only and entirely whatever people are willing to pay you for it," she explains.
"That's when it gets scary for people because there is no floor if enough people head for the exit. Nothing prevents it from trading at $10,000 tomorrow if enough individuals give up or are forced to sell."
Why is this happening now?
So there was the already challenging backdrop for Bitcoin - and then came the following happenings in the last 24 hours:
1. Binance, the world's largest crypto exchange (essentially a platform for exchanging cryptocurrencies), temporarily halted all Bitcoin withdrawals. It claimed this was due to a "blocked transaction," but not everyone believed it.
2. Celsius, another cryptocurrency lender, did the same, but cited "severe market conditions" rather than technological concerns. And now, the Coinbase exchange has stated that it is laying off 18 percent of its workers, blaming the "crypto winter" in part.
Concerned investors began selling even more Bitcoin.
The first two were terrifying. Consider the possibility that you were suddenly unable to withdraw cash from your bank, or that you had heard that others were unable to do so. You'd be at the nearest cash machine in record time, along with everyone else, causing even more chaos.
What can make things better?
In a nutshell, in order to stabilize it, those who still have Bitcoin must hang onto it, while others must resume purchasing it. This has happened previously.
Crypto enthusiasts will tell you that now is a fantastic time to buy since it is cheap - and then you must sit back and wait for it to turn the corner. This is how it has always been.
"The pump will always happen," one of them tweeted earlier.
The compelling stories of those who "made rich quick" and high-profile celebrity endorsements do draw additional money.
Elon Musk has frequently spoken about his love of cryptocurrency, and his electric-car business Tesla spent $1.5 billion in Bitcoin last year.
However, investing advisors advise extreme caution.
"Honestly, it's somewhere only the brave should go," Altaff Kassam, managing director of State Street Advisors, told BBC Radio 5 Live's Wake Up To Money programme.
In October 2021, Hollywood A-lister Matt Damon featured a crypto campaign with the motto "Fortune Favors the Brave." It was shown during the Super Bowl and has received 28 million views on Twitter and YouTube.
However, the "brave" who purchased Bitcoin when the advertisement aired are unlikely to believe they were "favoured" Since it was worth around three times as much then as it is now.
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All images culled from GOOGLE SEARCH.
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