We were very far away from reality, and maybe now people will start thinking differently. The crypto market is down. This is because people finally stopped paying for what they thought would happen and started looking at what's really going on with crypto. For a time, people thought that crypto would become a big part of the financial system very quickly. So they were willing to pay a lot for crypto assets. Now it seems like that is not going to happen as fast as people thought. The crypto market is now pricing things realistically.  The prices of crypto assets were high because people thought that crypto would be used everywhere in the system soon. They thought that crypto would be used so much that it would be okay to print a lot of new tokens and not charge very much in fees. That has not happened. Now the prices are going down because people are realizing that crypto is not going to be used much as they thought. The crypto market is adjusting to a realistic idea of what is going to happen.  People who trade are guessing that the price of Bitcoin will go below sixty-five thousand dollars. This is what Bloomberg says about Bitcoin. Bitcoin is what these traders are betting on. They think Bitcoin will not stay above sixty-five thousand dollars.  The biggest mistake people made was thinking that traditional finance would move to blockchains and that would automatically make people want to use blockchains and their tokens. When big financial companies actually tried using blockchain technology, they did it in a way that let them keep control and make sure everything was safe and legal. They also wanted to keep making money.  Some companies that help people buy and sell things, and the places where people trade, have tried using tokens, but they did not send a lot of business through the markets where people pay fees. When they did use cryptocurrency systems, they liked to use private ledgers or their own special systems for settling accounts rather than public blockchains. The result is really simple. It makes people uncomfortable. The thing is, all the activity with L1s and L2s did not bring in money. Tokens were priced with the idea that they would make money from fees in the future.. When that future did not happen, the price of these tokens had to be changed. This is because the tokens were priced high for what they were actually worth. The activity, with L1s and L2s, just did not turn into the money that people thought it would.  This problem is really obvious when you look at high-throughput chains that people liked because they were busy, not because they made sense financially. Sometimes you see a jump in the number of transactions, usually because of those funny coins or people trading just to make a quick profit. This makes it seem like a lot of people are using the chain. It does not actually create a steady stream of money coming in. When the excitement dies down, the money from fees drops a lot. The chain is still creating new tokens, which shows that there is a big difference between the kind of usage that looks good on graphs and the kind of usage that will help the chain be valuable, for a long time. The high-throughput chains and their transaction volume are not as strong as they seem. The chains need to have revenue streams to be successful, and the high-throughput chains are not doing a good job of that. The market is now clearly saying that it does not like businesses that have chains where things only happen sometimes, fees can be easily lowered, and prices keep going up. The market does not like chains with this kind of activity because it is not steady. The market also does not like that fees can be lowered, which means companies, in this market, will make money. To make things worse, prices are still very high. The market is basically discounting these chains, which means it thinks they are not as valuable as they used to be.  Things changed when big picture problems made the basic issues worse. Prices kept going up for a time. This meant that people who had money to invest wanted to put it into things that would give them income or things that were known to be valuable. Companies that used intelligence did well because they could show that they were making money and working efficiently. Gold did well, too, because it is seen as a neutral way to store value. On the one hand, cryptocurrency tried to be both a regular income maker and a safe store of value, at the same time, but it did not do a good job of being either one. When people with money had to decide, they did not choose crypto. This is not because crypto is not useful. It is just that it became really hard to explain why crypto is an idea when there are a lot of rules about money. Crypto lost out because its benefits were not easy to understand in a situation where money is tightly controlled. The value of crypto was still there. It was harder to make a strong case for it. Crypto is still something that people think has value. It was not the first choice when money was being allocated.  Politics made things more fragile or stronger. Crypto had become somewhat reliant on a political path in the United States. This path suggested that rules would be relaxed, stablecoins would be adopted, and digital assets would be viewed favorably.  When these things did not happen, it was clear how different assets interacted with each other. Bitcoin stopped being a safety net and started moving in the opposite direction of currencies it used to go up with. This shows that Crypto investors were making decisions based on their positions, not because they really believed in Crypto. The Crypto market was driven by positioning, not conviction, which is why we saw this change in Bitcoin and other digital assets, like Crypto. This was not about selling because of an idea; it was about the forced repricing of a crowded macro trade. The macro trade was really crowded. That is why this repricing happened.  The idea of crypto being like " gold" did not really work out. When countries started to have problems with each other, and sanctions became a big deal, countries did not use crypto as a safe asset. They used gold instead. Russia used gold to deal with sanctions, and China has been buying gold to protect itself from future problems and financial pressure. The " gold" idea just did not happen because countries still prefer physical gold. This does not change what Bitcoin is about. It shows a big difference: people who use Bitcoin want to make sure it is free from censorship, while countries want Bitcoin to be widely used and accepted by big institutions. The price of Bitcoin was based on the idea that it could do both of these things at the time, but that idea was not correct yet. Bitcoin is still about being free from censorship, and countries are still looking for Bitcoin to be something they can use easily. Gold and artificial intelligence kept going up. Crypto just kept going down. People started to lose faith in crypto. Markets can handle it when things are up and down a lot. They have a hard time when things are not doing well for a long time, and there is too much of something. A lot of crypto things are still making new tokens really fast. They are not showing that people want them more and more. When people stop thinking that crypto will become really popular before there are many tokens and the price goes down, it makes sense to sell. Gold and artificial intelligence are still doing well. Crypto is not. People are losing faith in crypto because it is not doing well, and there are many tokens.  The AI and crypto story did not work out as people thought it would. This made people lose more confidence. The market thought that AI systems would need blockchains to do things like buy and sell, work together, and pay each other. What really happened was different. AI systems got a lot better quickly using private platforms, old payment systems, and identity systems that are controlled by one company. Most of the value went to the AI models and the apps that use them, not to the blockchains. The AI and crypto idea was supposed to change everything. It did not. AI systems are still getting better and better. They are using traditional systems to do it. When crypto and Artificial Intelligence meet, they usually do so in ways that change the idea of crypto. This turns Artificial Intelligence chains into networks that can be used for anything without any clear differences in terms of money. People thought there would be a lot of demand for things on the chain. That never happened. So the tokens that were priced for that future had to be priced. Crypto and Artificial Intelligence are still related, and crypto is still a part of this relationship. Some people who sell things started to get involved. There are vehicles that hold cryptocurrency and trade it like regular stocks. These vehicles can be things like treasury-style entities and exchange-traded products. When the market is going down, these vehicles can start to trade for more money than the things they actually own. This is a problem because it makes some people want to take action to get the value up. These people, like activists and arbitrageurs, want to make money, so they try to get the vehicles to sell the cryptocurrency they own or stop buying more. The thing that helps drive up demand when the market's good becomes a problem when the market is bad. This happens when there is not a lot of money moving around, which makes it even worse. Crypto assets are the problem because they are losing value, and that is making everything else lose value, too. When crypto assets are not doing well, it affects all the vehicles that hold them.  At the time, a lot of the power in the system moved away from crypto exchanges and into things like ETFs, options markets, and cross-asset strategies. This is important because when there are problems in those places, it does not look like a wave of selling on the crypto exchanges. A day with a record number of ETF trades, a huge amount of options premium traded, and many big assets being sold at the time, but not many selling on the exchanges, shows that the problem is with the power outside of the crypto exchanges. Crypto exchanges are not showing the selling, but the problem is still there, with the ETFs and options markets and cross-asset strategies. When this happens, funds have to sell some of their investments, like Bitcoin, away. They do this even if they think Bitcoin is an investment in the long run. This is what big problems in finance look like: they happen fast, it is hard to understand what is going on, and people who are used to crypto have a hard time figuring out what is happening as it happens.  The way Currency dynamics work may have made this situation worse. When people get out of trades that make money from differences in Currency exchange rates, those who use Currencies with low interest rates can cause problems with other investments when it costs more to borrow money. If many trades that are connected to each other start to fail at the same time, the people in charge have to sell whatever they can not sell what they want to. The Crypto market is always open and has a lot of money moving around, so it is a place to get cash when this happens to Crypto and other investments.  This does not mean that crypto is done for or that it does not matter. What it means is that people who buy and sell crypto thought it was already a part of the global system, but really, it is still very much against that system. The world is going towards a place where there is a lot of debt, people are being watched all the time, and taxes are getting worse, especially since artificial intelligence is taking jobs without creating new  ones. In the past when things were like this, people wanted assets that the government could not control and that they could easily move around. This only happens after people have denied what is going on and tried to suppress it. Crypto is one of these assets and people will want crypto because of this. The demand for crypto will increase because crypto is censorship-resistant and portable and people like that, about crypto. The Bitcoin adoption cycle that people first got into because they had problems with capital controls it followed this pattern. The Bitcoin adoption is something that happened when people were having trouble with capital controls. They found Bitcoin as a way out. This is how the Bitcoin adoption cycle worked for people who were having these problems.  The big mistake was not having faith in what crypto's really about, but thinking it would pay off fast for working with the systems it was meant to avoid. Now people are looking at crypto for what it is: a new financial system that is still being built and it is becoming more important as the world becomes a tougher place. The road to getting there is slower and more complicated than people thought and it is hurting the hopes of many people who got into crypto early. Crypto is becoming more relevant as the world becomes more controlling. That is what crypto is really, about.  If there is a single honest summary, it is this: assets designed to exist outside the nation state tried to grow by integrating with it, and the market punished that contradiction when it failed. The drawdown is not a rejection of crypto’s purpose, but a brutal correction of its timeline.

The is an opinion piece based on the author’s POV and does not necessarily reflect the views of HackerNoon.

Is Crypto Doomed?

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