Appearing in 2009, bitcoin experienced its highest price in 2021, approaching $70,000. But since this peak, its value has literally melted, with a drop of more than 70% in 2024. This real “cryptocrash” comes after a decade of meteoric rise and brutally calls into question the general public’s enthusiasm for crypto.
An economic and geopolitical environment causing anxiety for crypto
The collapse of the bitcoin price in 2024 is part of an unstable global context, not conducive to risk-taking. Record inflation resulting from the post-Covid recovery and the war in Ukraine is encouraging crypto investors to turn to safe havens.
The prospect of a global recession in 2023, confirmed by the IMF, is also weighing on crypto markets. And the aggressive rise in interest rates decided by central banks is increasing the cost of credit, draining liquidity from speculative assets like cryptocurrencies.
Serial scandals that undermine trust
The collapse of FTX, considered one of the safest crypto platforms in the industry, exposed fraudulent practices and undermined trust. Other bankruptcies of major players followed.
These repeated scandals highlight the lack of supervision in the sector. They remind us that the extreme volatility of cryptocurrencies is not the only danger. Their opacity also makes them a breeding ground for price manipulation and the scam. Faced with these abuses, many countries such as the United States are preparing reinforced regulation of crypto. In particular, to better protect amateur investors from risks.
But this prospect of increased state control goes against the libertarian ideology at the origin of the movement. It reduces the speculative appeal of bitcoin, designed as a decentralized asset sheltered from central banks.
Limited bitcoin adoption and uncertain business model
Behind these economic factors, the long-term viability of bitcoin is at stake. The complexity of crypto payments limits their daily use. And its staggering energy consumption for mining new bitcoins is of concern.
If bitcoin survives this “cryptocrash”, it will need to demonstrate its ability to integrate into the financial system in the long term. But also, its ability to truly serve as a credible alternative to traditional currencies. A bet far from won.
Between widespread loss of confidence, regulatory tightening and limited crypto adoption, bitcoin faces the most serious crisis in its history in 2024. It must now prove its resilience and usefulness in the face of increasingly strong headwinds. Otherwise, the dream of decentralized virtual currencies could suddenly come to an end.
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