The days of enormous cryptocurrency profits are passing as bitcoin gets monotonous

The rise to about $70,000 per bitcoin over the previous year appeared like a significant jump at the height of the bull market. What a quantity!

However, absolute numbers are misleading because it is completely arbitrary to define what counts as a single entity.

What unit of investment exactly equals $70,000? Yes, a Class A share of Berkshire Hathaway Inc. costs around $400,000. What else, then? If a barrel of oil costs more than $100, it is deemed costly.

A share of Apple Inc. would be worth more than $30,000, up from $130 at the moment, if stock splits—which arbitrarily divide a stock into a set number to make individual shares appear cheaper—had not taken place.

That reflects important market factors that, while generally welcomed, have recently become more pronounced: regulation and enforcement, which is fundamentally altering cryptocurrency.

As a result, looking at percentages rather than exact numbers is more accurate. In light of that, bitcoin hasn’t really increased all that much. In every market cycle, the surges have really been smaller.

Do you detest cryptocurrency, Ethan Lou? Bet against it and put your money where your mouth is.

All of this indicates that the days of continual, dramatic price swings and enormous profits are unavoidable.

In the boom-bust cycles of bitcoin, there have been three major peaks: $1,000 in 2013, almost $20,000 in 2017, and about $70,000 in 2021. The rally has decreased in percentage terms each time. Only slightly more than three times as high as the previous peak was the last one. However, the $20,000 in 2017 was 20 times the 2013 peak.

What about the $1,000 in 2013 in comparison to earlier prices? Well, prior to that, the markets for bitcoin were considerably less developed than they are now, making objective pricing challenging. The standard exchange rate at the time was 10,000 units for two pizzas. At the time, Bitcoin was essentially useless. Whatever the multiple was from that moment to its peak of $1,000 in 2013, it was undoubtedly well over 20x.

The simplicity of involvement for investors and those who create investment products was what had propelled this boom. In contrast to traditional financial instruments, neither Bitcoin nor the cryptocurrency industry that gave rise to it required any paperwork for users. Through a smartphone app, you may meet someone from Craigslist, give them cash, and receive bitcoins in return.

Anyone could launch their own cryptocurrency or exchange platform on the business side. It was well known that the QuadrigCX exchange was only one man using a laptop. A rush of fresh money that had not before been in the markets flooded into the cryptocurrency realm as a result of all this easiness. Early in 2022, a survey revealed that 55% of Bitcoin investors had only recently started using it.

There isn’t much time left for this. And it’s not just because of the tighter credit restrictions brought on by the macroeconomic environment of increased interest rates. It had never been enforced before. As the Justice Department and a more stringent Securities and Exchange Commission increase their investigation of the sector, the US government has slapped penalties on various blockchain programmes.

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