Letter #7: Bitcoin and the Bear (?) Market
It’s been an “exciting” few weeks for Bitcoin, and many people, especially the newer participants in the space, will say that the excitement has been of the worst kind. At the time of writing, Bitcoin, the bellwether cryptocurrency and the largest by market cap, is down about 50% from its all-time price high set just a few weeks ago.
What happened that caused the Bitcoin market to see such chaos over the past two weeks? Is this normal? And is Bitcoin actually “dead” as so many of its opponents have claimed on Twitter and in the media?
FUD - Fear, Uncertainty, and Doubt
If you start getting familiar with Bitcoin, not too long will pass before you hear someone talk about all of the “FUD” that happens within the space. “FUD” is an acronym that stands for Fear, Uncertainty, and Doubt, and it refers to any bit of news that becomes widely known and, more specifically, causes people to lose interest in and support for Bitcoin. FUD often leads to “panic selling”, most commonly by new investors in the market, and any time there is a greater number of sellers than buyers in a market, an asset’s price will decrease to compensate for lesser demand. An excess of FUD in Bitcoin markets is something that happens quite regularly, and this month has been no different. Let’s dive into the newsworthy events over the past few weeks that have created fear within the Bitcoin space.