An article posted in Forbes’ Level-Up encouraged its readers to buy into bitcoin, despite bitcoin’s price currently sitting within range of its all-time high, following gains of several hundreds of percent over the course of the preceding year. The Forbes owned magazine’s article highlights a consistent pattern among mainstream media outlets’ coverage of cryptocurrency, in which cryptocurrency is sidelined and ignored whilst its price is low, before news organizations rally hype for bitcoin investment after meteoric price gains have already been made.
Mainstream Media Has a Tendency to Dismiss Bitcoin While Its Price Is Low Before Hyping It After A Boom
Throughout the nascent years of cryptocurrency bitcoin received scant coverage in the press, with the exception of few niche technology publications. For several years bitcoin evaded extensive coverage in the mainstream press, until the darknet hosted anonymous free-market The Silk Road began to garner attention for facilitating the sale of illegal narcotics using bitcoin as its currency. A spattering of news outlets speculated about the potential for bitcoin’s use a vehicle for money laundering, terrorist financing and narcotics sales. Soon after, however, bitcoin stunned the world with meteoric price gains after unusually harsh austerity measures were being forced upon the nation of Cyprus during 2014. A resulting flood of citizens seeking to convert their savings into any store of value that could evade government seizure drove bitcoin prices from $40 USD to $260 USD.
The rest of 2013 saw many obituaries for bitcoin published by mainstream news outlets, before bitcoin again shocked the world be rallying past $1000 USD following a sudden flood of Chinese entrants into the cryptocurrency markets. The subsequent popping of the China bubble saw a slow year-long grind back to sub-$200 USD prices, seeing the majority of mainstream media publications dismiss the bitcoin bubble as a digital contemporary ‘Tulip Mania’ that would never be heard from again.
The tendency for mainstream news outlets to dismiss bitcoin while its price is low before hyping cryptocurrency after it has boomed has become routine since the 2013 China bubble. The article published by Forbes in Level-Up in recent days titled ‘How To Buy Bitcoin, Now That It’s Reached An All-Time High’ echoes this familiar sentiment. The opening paragraph states that “the price for one coin has spiked to about $2,900. If you haven’t already, now is the time to buy in”.
New Investors Must Recognize the Flippancy of Cryptocurrency Reporting in the Mainstream Media
The area of $2,900 turned out to be a local top, with USD prices on Bitstamp forging a new all-time high of $2980, before a dramatic retracement that saw the largest 4-day loss of dollar-value in bitcoin’s history to retest $2100 USD. The price has partially recovered back to approximately $2600, leaving readers of Level-Up who may have purchased above $2900 holding position losses of over 10%, assuming that they resisted panic selling at prices closer to $2100.
This type of reporting has a dramatic effect on the bitcoin markets. Floods of new investors often rush into the cryptocurrency markets after seeing waves of positive mainstream press coverage. This glut of new investment typically drives prices parabolic, creating unsustainable price gains and triggering the very volatility that the mainstream press cites in rejecting bitcoin’s practical use as a currency. Once gravity catches up to the price parabola, the press quickly changes its tone and returns to forecasting the inevitability of bitcoin’s demise. This reporting destabilizes the cryptocurrency markets and places new investors at risk, as many new cryptocurrency participants have no prior experience with trading in the financial markets.
New investors must recognize the flippancy of cryptocurrency reporting in mainstream media and avoid looking to such as a source of financial advice. Many publications cover bitcoin in order to capitalize on the spikes in cryptocurrency-related search engine queries that are typically produced by major news events or price actions within the cryptocurrency markets. The result is often poorly researched, hastily produced clickbait authored by journalists with little or no long-term experience with financial markets or cryptocurrency. Using this form of journalism as a source of investment advice is very risky, and new participants in the bitcoin markets should seek education from a variety of sources that have a demonstrated history of accurate reporting the cryptocurrency industries.
Do you think that mainstream news outlets hyping bitcoin after it has boomed influences inexperienced traders to make risky trades? Share your thoughts below!