Let the good times roll. After being stuck near the $38,000 mark for weeks, Bitcoin soared more than 5% on Sunday as it crossed $40,000 for the first time since April 2022. While this is still a ways from the currency's all-time high, the return of $40,000 Bitcoin is a significant psychological milestone and has triggered a wave of digital backslapping on the echo chamber known as Crypto Twitter, where too many of us spend far too much time.
The glee over $40,000 was tempered by warnings, however. Some longtime crypto watchers warned the recent price action will bring about the full-blown return of the hucksters and scammers who made the industry so notorious in the past. Crypto journalist and Fortune alum David Z. Morris put it this way: "Hope you guys enjoyed chilling, once we cross $40k the normies will be back and things will get stupid and mostly bad again. If history teaches us anything, the enforcement actions of the past two years will mean exactly nothing because a whole new crop of morons will arrive."
Morris wasn't the only one making this observation. And it's a fair concern since previous booms have gone like this: Bitcoin goes on a run, leading to buzz on social media, which pulls in a new crop of green investors, 95% of whom eschew any basic research as they try to get a piece of the new thing. It's not long before a good number of them stray beyond the confines of Bitcoin, Ethereum, and the handful of other reputable cryptocurrencies and—egged on by financial predators—purchase an "up-and-coming" token instead. Months later they find themselves holding a near worthless pool of BARF tokens and cursing the gym trainer or YouTube guy (hey there, Lark!) who persuaded them to set their modest savings on fire in the first place.
I have no doubt these forces are already revving up and, if Bitcoin approaches its all-time high of nearly $69,000, the con artists will return en masse. But I'm not quite as cynical as Morris. Despite the here-we-go-again sensation, there are three reasons to think this latest crypto bull market will be less driven by scams than the previous ones.
The first is regulators. Unlike the booms of 2017 and 2021, when the SEC and others sleepwalked through mind-boggling frauds, the agencies are hovering like a bad-tempered hawk looking to shred anything that even smells like crypto. Second is the industry itself. Those left standing, including Coinbase and some of the better venture capitalists, are sick of being pilloried for the sins of the crooks in their midst—and just might be more forceful in denouncing the bad actors. Finally, after the myriad scams of the last go-round, many investors will have learned their lesson and only come back to crypto cautiously—if they come back at all.
"This time it's different" is usually terrible investment advice (which this is not!), but there's no denying the crypto industry is older and wiser, which has to count for something. Time will tell if crypto's worst moments are in the past—or if a new crop of Sam Bankman-Frieds and Do Kwons wait in the wings.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
