Bitcoin (BTC) detractors have once again resurfaced, branding the cryptocurrency as a fraud amid its ongoing struggle to reclaim the five-figure price level it last held in mid-November.
Nevertheless, crypto analyst Shanaka Anslem Perera offers a different perspective, suggesting that this criticism stems more from psychological reactions than financial realities. He connects the wave of panic selling to prospect theory, a concept honored with a Nobel Prize.
The Psychological Roots of Calling Bitcoin a “Scam”
In an X post dated November 17, Perera explained that sharp market corrections often drive retail investors to seek explanations that align with their emotional distress. Prospect theory—developed by Daniel Kahneman and Amos Tversky and awarded the Nobel Prize in 2002—posits that losses inflict about twice as much emotional pain as gains provide pleasure. When Bitcoin experiences steep declines of 30% to 40% following euphoric buying phases, labeling it as a scam becomes an emotional coping mechanism.
“People need an explanation matching the severity of their pain,” Perera wrote. “'Scam' fits perfectly.”
The analyst referenced data indicating approximately 70% of retail traders who purchase during market rallies end up selling at losses within one year. In contrast, long-term holders maintaining Bitcoin for four years or more have historically avoided losses even when entering at peak cycles.
“Every claim calling it a ‘scam’ is essentially proof of wealth transfer,” he asserted.
Perera also highlighted decreasing drawdowns across different market cycles—from over 90% in 2011 down to roughly 50–60% currently—as evidence that volatility is diminishing alongside Bitcoin’s maturation.
This viewpoint has resonated within parts of the online crypto community. For instance, user Gary Krug commented: “Labeling Bitcoin as a scam usually reflects emotional turmoil rather than rational analysis.” He further noted that markets tend to penalize impatience before rewarding steadfastness.
An additional voice from @Bitcoinfinity questioned why investors find it difficult to accumulate positions gradually. To this concern, Perera responded by pointing out human nature’s tendency toward chasing rapid profits instead of adopting patience and discipline over time—a crucial lesson for enduring Bitcoin’s cyclical swings through long-term commitment rather than quick wins.
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Tensions in Market Sentiment and Conflicting Narratives
The narrative framing “Bitcoin is a scam” emerges amid one of BTC’s lengthiest periods marked by extreme fear according to various market sentiment indicators—providing critics fresh ammunition while simultaneously reinforcing supporters’ psychological interpretations. Recently prominent economist Steve Hanke declared BTC has “zero fundamental value,” interpreting current price drops as evidence supporting his skepticism toward cryptocurrency systems overall.
The leading digital currency has dropped nearly 31% from its all-time high recently and briefly touched near $85,000 earlier this week before rebounding close to $88,000 only then slipping back around $87,000 today. Veteran analyst PlanB explains selling pressure comes partly from long-term holders still unsettled since events in 2021 alongside technical traders monitoring momentum signals plus cycle-focused investors anticipating further declines ahead.
On opposing sides stand buyers emphasizing fundamentals along with institutional adoption trends—creating what PlanB describes as stalemate conditions until sellers exhaust themselves completely. This tug-of-war dynamic has caused BTC returns over one year lag behind traditional assets: data shared by Perera reveals BTC posting -15%, whereas Gold gained +65%, and S&P500 rose +14%.
However , looking beyond short – term horizons , bitcoin ’ s performance dramatically outshines these benchmarks . Over three years , btc achieved +422 % roi compared against gold ’ s +141 % and spx ’ s +49 % . Since inception , bitcoin boasts returns exceeding two million percent while gold managed just +167 % and spx only about +447 % during same timeframe .