Funny Numbers: Explaining The Crypto Crash To Myself (And You)

If you haven’t seen the 1993 film, Ghost in the Machine, then I’m here to inform you of two tragedies today. One of which is your lack of experiencing an American cultural touchstone. The other, much more relevant one is the status and well-being of cryptocurrencies.

It’s busy living nowadays; with innumerable, heavily spirited circumstances governing your daily goings-on, there are going to be some culturally significant moments you simply won’t have the extra mental bandwidth to absorb. 

I can offer you the relative solace of knowing you’re only marginally less cultured than you would be had you seen this film. For the sake of brevity, and to keep you from scurrying off to IMDb, let me offer you a brief synopsis of the film, as well as how it relates to the topic of crypto: 

A professional technician moonlighting as a serial killer finds himself in the ER after a terrible car crash. Holed up in the hospital bed, the technician-turned-killer, whose name is, horrifyingly, Karl— Buffalo Bob had been taken two years prior; on to the next most absurd name— is suddenly subject to a surge of stormy lightning while undergoing an MRI scan. 

The result? His mind is swiftly transformed into electrical energy, where he continues his killing spree via the computer networks through the electrical grid. Absolutely maddening, and so inextricably 90s. 

Ghost in the Machine’s plot asks you to set aside your reservations regarding the implausibly malicious actions of a quasi-real-life computer-based super villain and entertain the very absurd, truly funny question: What if humans somehow became the prey of their own virtual creation? What if we invested so much of ourselves into these superficial bleeps and bloops that, upon some seemingly arbitrary catastrophe, all of our lives were thrust into sudden peril?

Look, the film scored an 11% on Rotten Tomatoes and frankly, I’m no Mary Shelley; I can’t weave these parallels as well as her and it’s already a bit heavy-handed of me to try. 

Here’s the bottom line: It’s now somehow my concern what these pseudo-intellectual crypo-shmoes do with their imaginations. And I’m bestowing that trivial fear on to you!

Bitcoin falls 14% after crypto lender Celsius Network freezes withdrawals.

I had to look up four of these words. 

There’s no shame in not having a solid footing on these funny numbers. If you’re looking for a good debriefing of the situation, let me hit you with the facts.

Following the release of a key inflation report last Friday, Bitcoins’ price fell below $24,000, hitting its lowest price since December 2020. This is paralleled by inflation’s rise to 8.6% in May, the fastest increase since December of 1981. 

This surge in inflation precipitated crypto’s fall as investors jettison their riskier assets across financial markets.

Celsius claims customers can earn an annual return of up to 18.6% when they transfer their crypto to its platform. But in a blog post made Sunday evening, Celsius said it had frozen withdrawals as well as transfers between accounts, “to stabilize liquidity and operations while we take steps to preserve and protect assets.”

Celsius Network cited “extreme conditions” as its reasoning for freezing withdrawals. The decision triggered a downturn across all cryptocurrencies, seeing the value drop below $1 Million on Monday for the first time since January 2021.

What Does This Price Drop Mean for Crypto Investors?

As long-term crypto-investors are aware, price swings are to be expected. For those deploying a buy-and-hold strategy, big dips aren’t much to worry about, according to Humphrey Yang, the personal finance expert behind Humphrey Talks.

In fact, he reassures us, we’ve seen this before. A few years back, during the “Great Crypto Crash of 2017”, a number of cryptocurrencies lost value. Including Bitcoin. But things turn up.

“I know that these things are super volatile, like some days they can go down 80%,” says Yang.

“It’s still an uncomfortable moment, and there’s some contagion risk around crypto more broadly,” said Joseph Edwards, head of financial strategy at fund management firm Solrise Finance.

Experts typically recommend you keep your crypto investments to under 5% of your portfolio. And, of course, it’s suggested that you only invest what you’re willing to lose. But volatility is something you have to get comfortable with in these markets because it’s not going anywhere.