Bitcoin's price dropped over the weekend, as a crypto user, should you care?
Note: I've often found crypto news stories to be unclear in terms of what it means for a crypto user. The purpose of this section of the blog is to do just that - translate what key news stories actually mean from the standpoint of a "user" of crypto.
The story
Click here for the full story. The TLDR is
Bitcoin dropped more than 10% over the weekend.
Most are ascribing this to mixture of tweets from Elon Musk (whose company, Tesla, owns $1.5B in bitcoin). Without wasting too much writing space, his tweet activity included
Tweeted that Tesla would stop accepting bitcoin as a form of payment to purchase Teslas (not sure anyone was doing this anyway, but ok)
Tweeted a response to another tweet that implied Tesla has sold or could sell its stash of bitcoin
Subsequently tweeted that Tesla has not sold its bitcoin.
As a crypto user...so what?
I have mixed feelings depending on what part of myself as a "user" i tap into...
...as a transacting user
First, i do not "transact" with bitcoin or other volatile cryptos and if possible one should avoid doing this in today's environment. Instead we should be using crypto stablecoins like USDT, USDC, and others which by design do NOT fluctuate in value no matter what Elon Musk does. I recognize that in certain parts of the world this is a difficult ask but the maturity of the crypto space probably demands it.
As a user of stablecoins, this activity over the weekend makes no difference. Your $1 in USDC continued to be $1 in USDC, your $1 in USDT continued to be $1 in USDT. Which means you can continue to use it to buy stuff just like you could friday and you lost nothing.
...as an investing user
I do invest in bitcoin. So yes i do care that it went down over the weekend.
I did understand how volatile bitcoin was when i invested in it.
I personally believe in the fundamental value of the technology behind bitcoin and remain bullish over the LONNNNNNNGGGGGGGG TERM (i.e. 3- 5 years) and i actually think Elon Musk, based on his tweets is aligned with this.
This is NOT financial advice.
..as a crypto enthusiast user
I think it is unfortunate that an innovator like Elon is associated with negative momentum on such innovative technology. I expect governments, regulators, twitter trolls and ill informed news stories to do this, not a well respected entrepreneur
I do think there is a silver lining in Elon's tweet relating to energy use. It does challenge the space to think more aggressively about bitcoin's energy usage; although i would suggest we equally examine the energy usage of what bitcoin intends to replace, regular money.
I understand where bitcoin and crypto are in their evolution... they are in the high growth, infancy stage... so i don't expect stability. But it will come, over time.
Happy monday, I'm off to my day job....