The crypto crash is inevitable for the same reason that all Ponzi schemes eventually collapse: there isn’t an endless supply of new people willing to pay ever-higher prices for the things you currently own. . The more interesting question is not whether many small investors will lose a lot of money on their crypto investments, but what will happen when they do?
Here’s what will happen when hundreds of thousands of young investors are crushed by the crypto crash: they will be radicalized. This will not be experienced as just a drop in price, as crypto represents much more than just an investment for its staunchest adherents — it represents a way out of the American trap. It represents the existence of opportunity, the possibility of economic mobility, validation of the idea that you, a regular, hard-working person with no connections, can go from bottom to top, thanks to nothing but your own informed choices. When this myth is shattered, disillusionment with the American system will follow. Unfortunately, given the realities of the moment, these newly disillusioned, radicalized, angry and broke people are much more likely to turn to fascism than to socialism.
Crypto, an inherently worthless online token wallet, is already fueled almost entirely by myth. Its value proposition is so inscrutable that when it melts, almost any narrative could be crafted to plausibly explain it. It was the Fed! The government! Leftists who hate entrepreneurship! They were the dark, sneaky forces of the tenebrous deep state! Anything will do. It will bolster the track record of those who placed their faith in crypto as a good substitute for the American Dream – a host of Barstool Sports readers and tech libertarians and the types of people who bought silver bullion from Alex Jones. before turning to Bitcoin. The crypto-evangelical populace leans heavily towards a kind of New Age anti-government, libertarian right, and when they see their financial dreams evaporate, they will likely aim for revenge on the things they already despise. The general effect will lead to a large number of newly angry, bitter, disillusioned and hopeless people who are too steeped in the culture wars to turn to working class solidarity and turn to hatred instead.
So if you want to have some fun during these end times, consider how the timing of the crypto crash could end up affecting the basic existence of American democracy itself. If the crash hits, say, six months before the 2024 presidential election, it could be enough to propel Donald Trump or one of his cronies into the White House and further poison the national dialogue with rage and vengeance. A fun thing to speculate.
The details of these changes, of course, are unpredictable. But I feel safe saying that when history looks back in hindsight, it will see crypto as a gargantuan bubble that – as capitalism always does – wiped out the finances of tons of little people who couldn’t not allow themselves to be wiped out, and left the rich mostly untouched, all because he managed to convince ordinary people to believe that this time was different. The illusion that the salvation of capitalism can be found in a new, smarter capitalism is incredibly seductive and always false. Hopefully we’ll get out of this before it’s too late.
