Many people say that cryptocurrency is independent because it is not controlled by any government. Technologically, this is true. But then why does the price of BTC or ETH drop every time due to a tweet from a politician or a regulator's decision?
Freedom of Technology ≠ Freedom of Price.
Here are three reasons why the market value of crypto depends on the "outside world":
1️⃣ Regulation Affects Demand (Fear vs. Trust)
Price is the balance of supply and demand. Political and regulatory decisions directly govern this balance:
⛔️ Bans/Restrictions: When major countries (China, USA) announce tough taxes or bans, investors feel fear and start selling massively. The price falls.
✅ Legalization (ETF): When regulators approve instruments like Bitcoin ETF, it opens the door for huge institutional capital (pension funds, banks). Demand surges sharply, pushing the price up.
Essence: The government cannot "turn off" blockchain, but it can decide whether to allow billions of dollars to connect to it.
2️⃣ Crypto is a High-Beta Risk Asset
To date, the market perceives cryptocurrency as one of the riskiest assets.
Risk Sell-off: When there is rising economic or political uncertainty in the world (war, crisis), investors are the first to sell the riskiest assets (crypto) and flee to "safe havens" (gold, dollar).
Market Sentiment: Statements from influential politicians or financiers (even if they do not lead to laws) can create a wave of panic or euphoria that instantly moves the market.
3️⃣ Dependence on "Gateways" to Fiat
To buy or sell crypto, 99% of people use regulated intermediaries (crypto exchanges, banks):
Control Over Exchanges: Exchanges must comply with the laws (KYC/AML) of their countries. If the government begins to tighten control over exchanges or block them, it paralyzes the ability for mass trading and withdrawal of funds, causing a crash.
🔑 CONCLUSION:
The true freedom of Bitcoin lies in its decentralized, indestructible technological base.
But its dependence is in the price, as it is formed by millions of investors acting within the regulated traditional financial system.
