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Why the Cryptocurrency Market Is in Shambles Right Now

Tough times for coins, both bit and doge.
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From Bitcoin bros to Dogecoin memelords, there’s a common refrain in the cryptocurrency world, especially doled out to newcomers: “Be careful.” That's because, as many people will tell you, cryptocurrencies are volatile by nature. This week's crypto-panic is a perfect storm involving Chinese financial leaders and Elon Musk, which illustrates the risk of investing in both established cryptocurrencies like Bitcoin or Ether, and "shitcoins" or alt-coins like Dogecoin. Today, the price of bitcoin fell below $40,000, declining 30% in a single day as the value of Ether and Dogecoin plunged similarly.

The selling frenzy kicked off on May 12, when Tesla CEO (and recent controversial Saturday Night Live host) Elon Musk announced that Tesla had suspended their decision to allow people to buy cars using bitcoin. Musk cited environmental concerns about the bitcoin mining process, in which a vast decentralized network of computers across the world solve math puzzles to power bitcoin transactions. "Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment," Musk's statement read, adding that "Tesla will not be selling any Bitcoin."

The drop intensified on May 18, after China banned financial institutions from participating in cryptocurrency transactions, and said that these institutions should not provide crypto services to clients.

In the shitcoin realm (of cryptocurrencies started essentially as jokes, with no real value), Dogecoin has gone on a wild ride. Musk used to be the poster boy for the meme-inspired joke coin, which takes its name from a meme of a Shiba Inu. But Dogecoin fell after Musk called it a "hustle" on SNL on May 8.

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Meanwhile, there's a new shitcoin sheriff in town. On May 17, Dave Portnoy, the polarizing founder of Barstool Sports, announced his almost entirely random allegiance to Safemoon, an alternative cryptocurrency that launched in March 2021 and imposes a penalty on anyone who sells their tokens in the form of a 10 percent fee. "Safemoon is now in the Dave Portnoy business, and vice versa. Why? I don't know fucking why. It could be a Ponzi scheme," Portnoy said. "I like the word 'moon' because that's where I want to go. So I am buying Safemoon."

Online, traders debate selling some of their crypto-stash, while many point out that massive dips in the value of Bitcoin and other cryptocurrencies have happened in the past, and likely do not portend the end of the crypto boom. A similar crash happened in 2017 and 2018, and as we know, since just a few weeks ago the price of a single bitcoin hovered around $55,000, it came back from that. Bitcoin famously has a cult-like devotion and confidence in its mysterious unknown founder, Satoshi Nakomoto. This week serves as one test of that kind of crypto devotion.

This story originally appeared on Esquire.com. Minor edits have been made by the Esquiremag.ph editors.

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About The Author
Anna Grace Lee
Anna Grace Lee is an editorial fellow at Esquire, where she covers pop culture, music, and entertainment.
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