Why Bitcoin’s Big Drop Could Actually Be Good News for Everyday People
Right now, a lot of headlines are panicking about Bitcoin and the wider crypto market crashing. After a year of huge gains, the excitement has clearly cooled. Bitcoin, which once shot past an eye-watering $120,000 in October, has slid back to around $88,000. That’s a sharp fall, and for crypto traders or day-trading enthusiasts, it probably feels painful. But according to one economist, this crash may actually be great news for everyone else.
Economist Dean Baker, co-director of the Center for Economic and Policy Research, has made the case that falling crypto prices can boost purchasing power for ordinary people. His argument is surprisingly simple. Crypto, in his view, behaves a lot like fake or counterfeit money. It allows people holding it to bid on real, scarce things — homes, land, event tickets, luxury goods — without those assets being backed by anything tangible.
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When large amounts of this “funny money” flow into the economy, prices tend to rise. Housing becomes more expensive. Tickets for major events get snapped up and resold at ridiculous prices. For people who don’t own crypto, everyday life quietly becomes more costly. So when crypto prices fall, that pressure is eased.
Baker explains it using a thought experiment. Imagine counterfeit money being detected and removed from circulation overnight. Suddenly, trillions of dollars vanish. Demand drops, and prices stop spiraling upward. From his perspective, plunging crypto values work in a similar way. As the value of digital coins shrinks, the ability to soak up large portions of the economy disappears with it.
And this isn’t about tiny numbers. Major cryptocurrencies like Bitcoin and Ethereum have collectively lost more than $1.2 trillion in market value. Baker points out that this is roughly equivalent to sending every household in the United States a check for about $10,000. Of course, no checks are actually being mailed, but the scale of money disappearing from speculative markets is enormous.
Critics often argue that crypto crashes hurt innovation or economic growth. Baker brushes that aside with sarcasm, saying the only real loss is that less crypto will be produced. In his view, that’s hardly a tragedy. No factories shut down. No essential services vanish. What disappears is largely speculative wealth built on thin air.
So while crypto investors may be watching charts with dread, Baker believes everyone else should be quietly celebrating. As the hype fades and prices fall, there’s simply more room in the economy for people who never played the crypto game in the first place.
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