‘Rationality Has Disappeared’: ECB’s Hansson Calls Cryptocurrencies A ‘Cult’

One of our long-standing criticisms of the Bitcoin crowd (and of the crypto crowd more generally) is that they’ve seemingly lost perspective.

The belief in Bitcoin’s ability to change the world has become more important for those trading it than the gains that have accrued from that trading. So convinced are these folks that they have gotten in on the ground floor of the technology that’s going to define the future of money that making real money now has become a secondary concern. Realizing the gains (i.e. selling to lock them in) no longer represents a “victory” in these people’s minds. In fact, they think of selling not as having ridden one of the most spectacular rallies in the history of speculative finance to the moon and stuck the proverbial dismount by getting out at the top, but rather as somehow conceding that they were “wrong” about the underlying thesis.

To be sure, some of these people didn’t have any perspective to begin with. The entire premise here (i.e. the idea that cryptocurrencies are going to supplant traditional currencies as a means of exchange) was absurd from the word go. Monetary authorities are not going to give up their monopoly or otherwise cede control of money to a decentralized network. That’s a profoundly ridiculous proposition. But to early adopters and to those who truly believe that the existing order can be supplanted, the reality of the situation will never set in.

The problem is that the disciples who came later are now acting in a way that suggests they see the crypto revolution more as a religion than as a way to capitalize financially on a speculative mania. Part of the problem here is that normally, whatever it is that people are speculating in isn’t viewed as synonymous with money to the speculators. The blurry line between digital currencies and the real currencies they’re priced in changes the decision calculus. It’s a mindfuck. And the result is that Bitcoin and cryptocurrencies in general have created what amounts to a cult.

We’ve said this over and over and on Wednesday, the ECB’s Ardo Hansson was out reinforcing it in interview with Estonia’s Eesti Paevaleht newspaper.

“Rationality has disappeared,” Hansson said, adding that “the whole cryptocurrency business is like a religious sect, in my opinion, where there’s a lot of emotion which helps in creating a bubble.”

Another sign that crypto enthusiasts have gone overboard in their dedication to the “cause” is the religious zeal with which they attack detractors. Anyone who calls a speculative spade a spade is written off as “jealous” – although usually, that sentiment is communicated in less eloquent terms like “butt hurt”, for instance.

What we would gently remind the folks who have gotten some semblance off rich off this craze is that there is no sense in which cashing out with a multi-thousand percent gain makes you a “loser.” In fact, it makes you the exact opposite of a loser. It makes you one of the most successful traders in the history of the world.

So do us a favor and think about that.

We’ll leave you with another quote from the above-mentioned Hansson:

Sooner or later the cryptocurrencies bubble will burst; we will see where the new equilibrium will be.