The past couple of years in crypto have been exceptionally turbulent, taking in new highs and new narratives to accompany them, along with crashes, collapses and prolonged grinds through market lows.
The fact that this wild ride has occurred when macro events seem to have tipped into a period of conflict and upheaval is no coincidence; current affairs and markets are intertwined, but the global background context adds to the sense of witnessing an especially volatile period.
All of which can lead one to look at Bitcoin and question what exactly happened to send prices surging to a 2021 double top, peaking at about $69,000 (having touched flash crash lows below $4,000 back in March 2020), only to then freefall back down to below $18,000 by early summer 2022, from which point signs of recovery have been repeatedly quashed.
What Drove the Bullishness of 2021?
One novel factor this time around was that due to the unprecedented measures implemented by governments around the world in response to covid-19, large swathes of the population found themselves spending substantial periods of 2021 indoors, and often in front of a computer.
At the same time, governments were printing money, and stimulus payments were finding their way to potential retail investors who had both the time and the inclination to explore risk-on trading and investment opportunities.
Coupled with this, there was, for some people, a sense of unease that perhaps the institutions in charge of the economy weren’t as reliable, responsible or forward-thinking as they had once believed, and that it might have been worth paying attention to alternative voices, such as those who had for some time been talking about Bitcoin.
Around this point, we see the amplification of several narratives: that Bitcoin was a hedge against inflation (while money was being printed like never before), that Bitcoin enabled financial independence and general self-reliance (while governments were micromanaging citizens’ personal and business affairs in an abruptly authoritarian manner), and that cryptocurrencies might have been the decentralized monetary progression required to enter a fully digital era (while Zoom and Amazon suddenly became ever-present, web-based conduits for our work and commercial needs).
We also had what appeared…
