Bitcoin is worth $100,000. It still doesn't have a single legitimate use case

It's speculation all the way down

The last crypto boom was much louder.

The price of bitcoin passed $100,000 yesterday. It was hovering around $72,000 a month ago, just before Donald Trump was elected. (The cryptocurrency industry spent almost $200 million on the 2024 election. They got their money’s worth.)

David Yaffe-Bellany of the New York Times calls it “the most successful investment product of the last 20 years,” which seems like a real indictment of the last couple decades.

$100K is a noteworthy milestone because it was the threshold that the bitcoin bros pined for during the last crypto boom (2021-2022). We are, according to the data, in the midst of another crypto boom.

But it doesn’t feel like another crypto boom, y’know?

The thing about cryptocurrency in 2021 was that you heard about it everywhere. The marketing was aggressive. The bros were obnoxious and everywhere. The stunts were elaborate.

And there was an internal logic to the perpetual noise machine. Because the money has to come from somewhere. The supply of bitcoin increases at a fixed rate. The use cases for bitcoin, circa 2021, were basically just financial crimes and financial speculation. Everything else was just a rounding error. So for the price of bitcoin to go up, you need to bring in new customers. You need to market it. You need to sell.

Hence the NFT craze (which relied more on Ethereum than Bitcoin, but the two are so heavily correlated that buzz for the one reliably lifts the price of the other).

Hence Chris Dixon and the rest of the Silicon Valley investor class trying to make “Web3” a thing.

Hence the Axie Infinity debacle, and all the sports arenas getting renamed after FTX or Crypto.com, and the SuperBowl blockchain advertising blitz, and the army of bros aggressively shouting “Have Fun Staying Poor” on Twitter-back-when-it-was-still-Twitter.

I’ve written before about "futurity.” Silicon Valley basically runs on the stuff.

Futurity ain’t solid. You can’t hold it in your hands. It isn’t liquid either — there’s no money in it, at least not yet. It’s a gas. It fills a room. No one can quite see it, but everyone breathes it in.

Or, to lean on the slighly-overused parlance of the day: futurity is a vibe shift.

Say what you will about the 2021-22 crypto bubble. Lord knows I said plenty. But it at least had the internal consistency of a self-fulfilling prophecy: (1) people talked about the blockchain being the future, so (2) more people opened up their Robin Hood app and bought the thing, (3) raising the price and providing further assurance that the blockchain is the future.

This worked until it inevitably didn’t. It was bad. It was also obvious if you knew how to look for this sort of thing.

What has happened since 2023 has been more of a stealth recovery. Venture Capitalists aren’t pouring money into blockchain startups anymore. All the overnight Web3 evangelists on LinkedIn have rebranded themselves as Generative AI hypemongers. When you hear about a cryptocurrency executive in the news, its usually an update on his fraud trial.

And, make no mistake, there are still no new use cases for the goddamn asset class. Bitcoin isn’t trading at $100,000 because some essential part of the economy runs on bitcoin now. It’s trading at $100,000 as the result of a Keynesian Beauty Contest. The price keeps going up because a subset of wealthy investors keeps betting that other wealthy investors will expect it to rise.

The fundamental value of one bitcoin — the amount of economic value a bitcoin can directly generate — remains zero dollars. But the speculative value of one bitcoin is one hundred thousand dollars, because that’s what the marginal investor has agreed to pay for it.

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The simplest explanation for the cryptocurrency recovery is that it is a significant asset class within the speculative economy. People who like to bet on things like to bet on cryptocurrencies. And the regulatory guardrails that create friction and attempt to steer the economy away from pure speculation and toward, y’know, actual products that actual customers purchase and make use of, keep being dismantled.

Bitcoin’s path from ~$17,000 in 2023 to $73,000 just before the Presidential election was characterized by benchmark moments where the normal financial industry kept winning permission to sink more legitimate money into crypto. Blackrock issued a Bitcoin ETF, so that people who wanted to bet on the price of bitcoin could do so without the hassle of actually buying the stuff. The SEC brought cases against Coinbase and other crypto firms, essentially saying “uh, hey, y’know how you’ve been marketing these things as unregulated securities? That’s illegal and you have to stop.” But several of those cases ran into crypto-friendly judges who declared financial regulation to be basically unconstitutional.

And, honestly, nothing is less surprising than the jump from $73,000 last month to $100,000 yesterday. The crypto industry backed Donald Trump. Crypto billionaires are funneling millions to Trump through his own shady crypto operation, World Liberty Financial. Elon Musk and Vivek Ramaswamy are aiming to gut the SEC , the Consumer Financial Protection Bureau, and every other regulatory agency that stands between you and speculative fraud.

It reminds me of this great passage from Ian Betteridge’s latest newsletter:

“Capitalism isn’t about free markets (every society since the year dot has had markets). Capitalism is about the primacy of capital, and a power structure where the owners of capital have ultimate power. It doesn’t matter if companies are more efficient, when you have billionaires that will prop them up or monopolies which are ‘too big to fail, too important to jail’.”

Donald Trump has just named David Sacks as the new White House “AI and Cryptocurrency Czar.” David Sacks is not, by any indication I have ever seen, a smart man. But he’s in a groupchat with a whole lot of owners of capital. And they like bitcoin and want the number to go up. This won’t affect the fundamental value of cryptocurrency, but it sure means a lot for the speculative value of the industry’s main asset classes.

We’re just going to have a wild era of speculation on unregulated securities, followed, eventually, by a stark reminder of why that’s a bad thing.

Because make no mistake: The money has to come from somewhere. If someone makes $50 million on a speculative asset, then some other set of people must have lost that $50 million. They just don’t know it yet.

This will end badly, for all the obvious reasons. But not yet, and probably not soon.

The crypto guys bought a government. They don’t even need to make the blockchain seem like the future anymore. Bitcoin has reached $100,000 because the owners of capital like it, and they have ultimate power now, and everyone knows it.

…What a stupid time we live in.