Bitcoin hype will clash with the Rolex recession

“BUY BTC”. The logo stamped on this week’s leaked version of the Grand Theft Auto VI trailer, depicting a faux-glamourous world of speedboats, supercars and “shoot-em-ups”, was well-timed. Bitcoin’s price has almost tripled this year to around US$42,000, where it was before the 2022 Terra debacle. Frothy six- to seven-figure price targets are back. With Coinbase Global’s boss touting Bitcoin as “key” to the West’s future and El Salvador’s Nayib Bukele demanding his critics apologise, you’d think an actual use case had been found.

Except – it hasn’t. And at the risk of sounding like the Simpsons’ “old man yells at cloud”, there are plenty of reasons to be cautious about this umpteenth upward swing on the crypto rollercoaster ride at a time of economic slowdown and possible recession.

The bull case preached by the laser-eyed and Luna-tattooed crowd is, as before, driven by sentiment and speculation rather than utility. Bitcoin may be a glorified pet rock in terms of money-ness, but people like to hoard it and trade it as a risky hybrid of gold and Nasdaq startup in the hope of outsized gains. The optimistic view is that any news will be good news as bad actors such as Sam Bankman-Fried or Zhao Changpeng get flushed out, mass-market spot exchange-traded funds (ETFs) get closer, and potential interest-rate cuts lift risk appetite. With a rising price providing a positive feedback loop, who wouldn’t want to take a punt?