Why Bitcoin’s belief bubble could pop or go exponential
The biggest risk to Bitcoin is running out of new buyers as its supporters and crypto exchanges preach about its virtues as an inflation hedge.
Just when many investors assumed Bitcoin only ever climbed, the cryptocurrency crashed 50 per cent over a horror five months.
Despite the beating, high-profile Wall Street financier and Bitcoin apostle Anthony Scaramucci took to the cryptocurrency’s chief recruitment platform, social media site X, to make the buy case this week.
“The strongest version of the bull case for Bitcoin, and the one I think is most intellectually defensible, is this,” Mr Scaramucci wrote.
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By continuing you agree to our Terms and Privacy Policy.“Bitcoin is a bet that the 21st-Century will need a neutral, non-sovereign, digitally native store of value, and that nothing else credibly fills that role. Given the macro trajectory of debt, money printing, AI disruption, and geopolitical fragmentation, that bet looks more reasonable with each passing year, not less.”
In reality, it doesn’t matter what Bitcoin represents in terms of its future price direction. What matters is whether its early adopters can persuade enough later adopters to buy into their faith-based system.
Put another way, today lots of people believe that just over 2000 years ago a virgin got pregnant and that Christian faith-based system benefits them.
Also today, millions of people believe Bitcoin is an innovative financial asset that will rise in value and shelter them from central banks’ money printing madness.
Whether Christians and Bitcoiners are right or wrong in their beliefs is irrelevant to their communities’ success when defined by growth.
The growth of the two largest Abrahamic religions Christianity and Islam depended on active preaching to convert others and grow their success.
For Bitcoiners, it’s no different. To get the cryptocurrency’s price to grow they need to convert more people into their faith-based system.
They have no other option because the biggest risk to Bitcoin’s valuation isn’t interest rate changes, AI, quantum computing, or a global recession. It’s running out of new believers (or fools, depending on your point of view) to buy into its story.
In this sense, Bitcoin also has the features of a Ponzi scheme.
As history shows these schemes all fail when they cannot raise more new money.
Therefore as long as Bitcoin can raise new money, it can always avoid the fate of all Ponzi schemes by collapsing in on itself.
ETFs, advertising
All this is why the decision of US financial regulators to approve Bitcoin exchange traded funds in January 2024 was a massive free kick for the cryptocurrency.
It instantly created a tsunami of new buyers as the price surged from $US41,000 to $US126,000 in 22 months.
By October 2025, Blackrock’s iShares Bitcoin Trust had shattered all records for ETF inflows and topped $US100 billion in value as the token hit a record high.
But for now the new buyers have dried up. And the existential threat of running out of new buyers also explains why crypto advertising is so commonplace across global sports teams, events, and social media networks.
Ultimately, it doesn’t matter whether the claims of Bitcoin’s supporters are true or false, what matters is whether enough people believe they’re true.
If they do, Bitcoin’s price will soar again and set records far above $US126,000.
In turn, its owners will see this as vindication of their beliefs. This is the same way as humans attending religious communities with more and more people over time, tend to have more and more faith over the equal periods of time in a snowball and flywheel effect.
But if Bitcoin fails to find sufficient new buyers, it could reveal itself as history’s biggest Ponzi scheme.
