Another year, another bitcoin collapse. At least, that's what it looks like from the outside. But look closer, and this time really does look different.
On Monday, bitcoin tumbled as much as 17% to $22,603, the lowest in about 18 months, after the freezing of withdrawals by the Celsius lending platform added to an overall risk-off backdrop as traders raise bets on more aggressive Federal Reserve tightening.
Bitcoin is about to fall back below the highs of its previous halving cycle peak. That's something that's never happened before and matters for the investment case in crypto.
Every four years or so, the amount of crypto that miners receive for solving the algorithmic problems that allow them to record transactions on the blockchain is halved. Every time this has happened, it triggered a parabolic rally. Every successive peak was higher than the last, and when a new peak was put in place, prices never revisited the lows again.
But it's more than a historical curiosity. It means that, no matter how late you were in the previous cycle, even if you bought at the very peak, as long as you waited four years, you always made money. And of course, every halving has had a smaller upside impact on the price, too. If we drop below $19,511 now (or so, exact figures vary by exchange) - little over 10 percentage points from where we are now - that will no longer be true.
And that could seriously damage the investment case for bitcoin, which relies on its ability to make money as its primary means of attracting capital and keeping the cycle going.
Now, I'm not saying a drop to $18,000 would spell the end of bitcoin. But it would seriously undermine the long-term narrative.
WASHINGTON POST