Bitcoin Is Crashing and Exchanges Freezing Up

In December 2024, the laseredeyed crypto enthusiasts were taking a victory lap. Bitcoin had just crossed the $100,000 milestone, and even the skeptics at FT Alfavville were forced into a somewhat brittle public apology for their years of doubt. At that moment, the narrative was that crypto had finally been freed from its regulatory shackles. Wall Street was finally in the game, and those who were once nervous about the technology could now invest through a convenient suite of ETFs.

The institutional-grade liquidity this was supposed to bring was meant to smooth out the volatility, finally etching the digital gold thesis into the granite of the global financial system. Over the years, I've learned that whenever someone tells you that a new era of stability has arrived, it's usually a good time to start looking for the nearest exit. Fast forward to today and digital gold has behaved a lot less like actual gold and more like a high beta tech stock on a very bad day. Bitcoin is currently trading down around 23% year to date and it has shed about 45% of its value since its October peak.

To put the severity of this move into perspective, the 13% plunge that we saw on February 5th was the largest 1-day drop in Bitcoin since the collapse of FTX back in 2022. One of the most fascinating aspects of Bitcoin is its hydraheaded narrative. Whenever one claim of its utility dies, three more sprout in its place. Over the years, we've been told that it's an alternative currency, a ticket to life-changing wealth, an inflation hedge, and a digital gold that would rally during geopolitical shocks.

Yet, while actual gold and silver hit records this year, Bitcoin has languished. Stocks are up, and geopolitical risk has certainly increased. Inflation isn't under control yet either, but Bitcoin simply isn't doing any of the things that we were told it would do. >> The Dow is over 50,000 right now.

The S&P at almost 7,000 and the NASDAQ smashing records. >> As what Deodron of NYU points out, Bitcoin can be priced, but it can't be valued the way assets or commodities can. Assets are valued based on their cash flows and the riskiness of those cash flows. Commodities are valued based on their utilitarian supply and demand.

Bitcoin fits best into the category of currencies and collectibles, which derives their ...