Maybe it’s the halo effect, but bitcoin is making otherwise rational business journalists go bonkers.
Let’s review a few headlines from this past week:
On LinkedIn, an abundance of such headlines led to the summary:“Bitcoin is tanking again: Here’s why”
With words like Crash! Tank! Dip! Dive! Slide!, you can be forgiven for thinking the bottom’s fallen out of bitcoin. Even articles with less sensationalist headlines, like this one from Bloomberg, still display frightening graphics:
And then you realize that the Y-axis begins at $4,100 and tops off at $4,400. And that the headlines and articles conveniently omit:Normal volatility. Over the summer, there were 21 days when bitcoin either went up or went down by more than 5 percent. That’s almost twice a week! Was bitcoin “crashing” or “soaring” every time? Of course not. Context. Bitcoin began the year at $600; it’s $4,000 today. In the context of this growth, what does “tanking” even mean? Bitcoin could lose 70 percent of its value and still show a 100 percent return on the year. Bitcoin Cash. The price of bitcoin doesn’t factor in forks, like the free Bitcoin Cash distribution holders received last month. Bitcoin cash now trades for $500 per unit, so even if the price of bitcoin falls, holders may still see a gain.
Can you imagine the headlines if cryptocurrency actually imploded: “Bitcoin super-ultra-crashes, for real this time!”
Obsessively reporting on dips and gains, with exaggerated headlines, might have precedence in how stocks are covered, but for bitcoin it’s especially misleading.Why this approach doesn’t work
The day-to-day price of bitcoin doesn’t matter. Invest in the blockchain if you think it will one day replace gold or power infrastructure. Don’t if you’re looking for stable, short-term gains. Bitcoin is a 0 to 1 bet, closer to a seed investment in a startup than a publicly-traded stock.
Jumpy headlines about price...