Weekly crypto roundup: Bitcoin drops below $20,000 as crypto plunge continues

In today’s edition of Bitmama’s weekly crypto news roundup, we cover interesting developments in the cryptocurrency industry. Top picks – Bitcoin drops below $20,000 as crypto plunge continues, Bill Gates says crypto, NFTs are 100% based on greater fool theory, Elon Musk sued for $258bn over Dogecoin support.

Let’s get started.

Bitcoin drops below $20,000 as crypto plunge continues

The price of Bitcoin fell below $20,000 for the first time since late 2020 in a fresh sign that the selloff in cryptocurrencies is deepening.

Bitcoin, the most popular cryptocurrency, fell below the psychologically important threshold, dropping as much as 9 percent to less than $19,000, according to CoinDesk.

The last time Bitcoin was at this level was November 2020 when it was on its way up to its all-time high of nearly $69,000.

Bitcoin has now lost more than 70 percent of its value since reaching that peak.

Ethereum, another widely followed cryptocurrency that has been sliding in recent weeks, took a similar tumble on Saturday.

It is the latest sign of turmoil in the cryptocurrency industry amid wider turbulence in financial markets. Investors are selling off riskier assets because central banks are raising interest rates to combat quickening inflation.

Bill Gates says crypto, NFTs 100% based on greater fool theory

Microsoft co-founder, Bill Gates has stated that investment in crypto like non fungible tokens (NFTs) is based on the greater fool theory.

The billionaire who spoke at a climate conference doubted that expensive digital images of monkeys are going to improve the world immensely.

On the other hand, Gates defended digital banking efforts which he supports through his philanthropic foundations, regarding it as hundreds of times more efficient than cryptocurrencies.

What is “Greater fool theory”?

The greater fool theory argues that prices go up because people are able to sell overpriced securities to a greater fool whether or not they are overvalued – until there are no fools left.

The theory implies that investors are most likely to ignore valuations, earnings reports and all other data as well as the fundamentals that involve understanding and company ownership when investing in an asset.

What Gates is saying

Gates has always maintained a position as someone that likes investing in things with valuable output.

Gates characterized cryptocurrencies and NFTs as market-driven by sentiment. , he said – 

“As an asset class, it’s 100% based on the greater fool theory—that somebody’s going to pay more for it than I do”.

The billionaire has also warned severely against investment in crypto as well as about the environmental impact of crypto.

Elon Musk sued for $258bn over dogecoin support

An investor in dogecoin, originally created as a joke but whose value increased and fell as it was promoted by Elon Musk, filed a $258 billion lawsuit  on Thursday against the billionaire and his companies Tesla and SpaceX.

Keith Johnson, who says he lost money after investing in dogecoin, described himself as an “American citizen who was defrauded” by what he called a “Dogecoin Crypto Pyramid Scheme.”

He is asking for his motion, filed in a New York court, to be classified as a class action suit on behalf of those who have suffered losses by investing in dogecoin since 2019.

Since Musk began promoting virtual currency, investors have lost around $86 billion, Johnson estimates. He would like Musk to reimburse investors this sum, plus pay double that in damages — an additional $172 billion.

Founded in 2013, dogecoin’s creators say it was intended as an ironic response to two big internet phenomena: cryptocurrencies such as bitcoin, and a meme image of a Shiba Inu dog.

The price of dogecoin traded at just fractions of a cent for most of its existence. But it saw its value leap at the beginning of 2021, rising to $0.73 in May of that year, amid a buying frenzy that surrounded the GameStop saga and after humorous messages about it from Musk.

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