The Bitcoin Plunge is not a Market Correction

It drives me batty to read respected people in national publications talk about the nosedive of Bitcoin and other crypto as a “market correction.”

A market correction happens when the price of a security or a general market of securities overruns any sort of historical baseline for value. When you talk about stocks, there are the simple metrics of how much money a company makes or the value of that company’s assets. There are metrics like that for real estate, municipal bonds, and even manufacturing.

A correction comes when the market realizes that the price has been bid up far past what the underlying value of the asset is. This happens fairly often: people buy stock based on what they expect the performance of the company to be. Sometimes people get excited.

When people say that crypto is no different than the stock market, they are either lying to you or to themselves. There is no P/E report on Bitcoin. No debt-to-asset report on Etherium. Because there is nothing there. There is nothing, absolutely nothing, supporting the value of those tokens.

The price is based on blind faith, sell-shaming, and billionaires spinning a story that ends with them having your money.

The tower is crumbling now; we have been on a roughly monthly cadence hearing about the failure of some sham company that banked everything on crypto always going up. The market plunges, then holds steady for a while, cryptobros in their executive suites sweating as the scam crumbles until they rush for the doors calling back over their shoulders “#HODL!” and another crypto company based on the “always-up” model craters, unable to even tolerate the market that is merely steady.

A true market correction would reduce Bitcoin to just a little bit over zero. I will grant the little bit because Bitcoin is just a little bit useful for things besides being a store of value. Oligarchs have to shift their cash, after all.