Crypto’s crash is bound to happen for the same reason all Ponzi schemes eventually collapse: there aren’t an infinite number of new people willing to pay ever-increasing prices for the things you currently own. The more interesting question is not whether many retail investors will lose a lot of money on their crypto investments, but what happens when they do?
Here’s what will happen when hundreds of thousands of younger investors are crushed by the crypto crash: They will be radicalized. This will not be seen simply as a price drop, as crypto represents much more than a simple investment for its most ardent supporters – it represents a way out of the American trap. It represents the existence of possibility, the possibility of economic mobility, the validation of the idea that you, a normal, hard-working, unconnected person, can rise from the bottom to the top thanks to nothing but your own wise decisions. When this myth is shattered, disenchantment with the American system will follow. Unfortunately, given the realities of the moment, these newly disillusioned and radicalized and angry and broke people are much more likely to turn to fascism than to socialism.
Crypto, a portfolio of inherently worthless online tokens, is already fueled almost entirely by myth. Its value proposition is so unfathomable that when it melts together almost any narrative could be constructed to plausibly explain it. It was the Fed! The government! The Left Who Hate Entrepreneurship! It was the dark and insidious forces of the shadowy deep state! Everything will do. It will prevail on the ancestors of those who put their faith in crypto as a good substitute for the American Dream – a crowd of Barstool Sports readers and tech libertarians and the kind of people who used to buy silver bullion from Alex Jones before they did turned to bitcoin. The crypto-evangelist populace leans heavily towards a sort of libertarian, anti-government, new-age right wingism, and as they see their financial dreams evaporate, they’ll likely seek revenge on the things they already despise. The broad impact will result in large numbers of new angry, bitter, disillusioned, hopeless people too immersed in the culture war to turn to working-class solidarity and turning to hate instead.
So if you’re looking to enjoy yourself in these end times, consider how much the timing of the crypto crash could affect the very very existence of American democracy. For example, if the crash occurs six months before the 2024 presidential election, it could be enough fuel to propel Donald Trump or one of his henchmen back into the White House and further poison the national dialogue with anger and a spirit of revenge. A fun thing to speculate on.
The details of these changes are of course unpredictable. But I can safely say that in hindsight, history will see crypto as a gigantic bubble that — like capitalism always does — wiped out the finances of tons of little folks who couldn’t afford to be wiped out, and which left Reich mostly intact, all because it could convince ordinary people that those times were different. The delusion that salvation from capitalism lies in the new, smarter capitalism is incredibly seductive and always wrong. Let’s hope we break away from this before it’s too late.
