When Bitcoin surpassed the $100,000 milestone in early December, it was hailed as a defining moment that solidified its reputation as one of the 21st century’s most lucrative investment products. Yet, its subsequent dip to $95,000 by January 2 underscored the asset’s notorious volatility and its dependence on fluctuating market sentiments.
Bitcoin’s price swings often provoke polarized reactions. While its climb to $100,000 was celebrated, its slight retreat was less discussed. For those who invested a year ago when Bitcoin was priced at $44,000, or during its pandemic-era lows of $5,000, the returns remain remarkable.
“I have a few hundred dollars in Bitcoin and Ethereum,” shared Nick March, an assistant editor-in-chief at The National, in his recent article. “While I’ve shown a paper profit, I still don’t see a persistent real-world use for crypto and have previously, and erroneously, predicted its crash.”
Supporters and Critics: A Divided Landscape
Cryptocurrency advocates champion its potential to revolutionize finance by decentralizing traditional banking systems. Prince Philip Karageorgevitch recently described Bitcoin as a “transformative force reshaping how we understand money.”
However, even ardent crypto supporters rarely use these digital assets for everyday transactions, such as paying for food or transport, leaving critics to argue that “cryptocurrency” is a misnomer. Opponents also highlight its speculative nature, likening its value to the whims of market sentiment rather than practical utility.
Michael Lewis, in his book Going Infinite, captured this dichotomy, stating, “Bitcoin often gets explained but somehow never stays explained.”
A Year of Gains and Risks
Last year was particularly favorable for cryptocurrency, buoyed by regulated exchange-traded funds, President-elect Donald Trump’s positive remarks on crypto, and speculation about a U.S. strategic reserve for digital assets. Yet, these developments came alongside reports of increasingly sophisticated scams and billions lost to system hacks and pump-and-dump schemes.
The National recently detailed instances where new investors, swayed by fear of missing out (FOMO), lost significant amounts of money to fraudulent schemes. Market behaviors, such as herd mentality and over-promotion, continue to raise concerns of speculative bubbles.
Navigating the Future
Looking ahead, many in the industry, including March, hope for a balanced approach. “If I had one wish for 2025, it would be that this sector finds a middle way forward, somewhere less challenging than either the booster frontierland of crypto acolytes or the scam-filled place where criminals are to be found.”
The approval of regulated stablecoins provides a glimpse of that balance. However, the crypto industry must work to create secure environments for investors while maintaining the innovative spirit that has driven its growth. Whether Bitcoin remains a volatile asset or evolves into a stable financial instrument will largely depend on how these challenges are addressed.