Bitcoin (BTC) critics have returned to a familiar refrain, calling the asset a scam as it struggles to go back to the five-figure level it last enjoyed in mid-November.
However, crypto commentator Shanaka Anslem Perera has reframed the argument as a psychological response rather than a financial one, tying panic selling to Nobel Prize–winning prospect theory.
The Psychology Behind the “Scam” Label
In a November 17 post on X, Perera argued that steep corrections often push retail investors to search for explanations that match emotional pain. Prospect theory, developed by Daniel Kahneman and Amos Tversky and awarded the Nobel Prize in 2002, holds that losses feel roughly twice as painful as gains feel rewarding. And when Bitcoin, for example, drops 30% to 40% after euphoric buying, labeling it a scam becomes an emotional outlet.
“You need an explanation that matches the intensity of that pain,” wrote Perera. “’Scam’ fits perfectly.”
The analyst cited data claiming that around 70% of retail traders who buy during rallies sell at a loss within a year, while long-term holders who kept Bitcoin for four years or more have historically avoided losses even when buying at cycle peaks.
“Every ‘scam’ call is a wealth transfer receipt,” he claimed.
He also pointed to shrinking drawdowns across cycles, from more than 90% in 2011 to about 50–60% in the current one, as evidence that volatility has been easing with maturity.
Perera’s assertions found some support among the online crypto community, with user Gary Krug stating that “Calling Bitcoin a scam is usually a response to emotional whiplash, not analysis.” He also added that markets punish impatience before they reward conviction.
Another account, Bitcoinfinity, questioned why investors struggle to build positions slowly, to which Perera replied that humans naturally chase quick gains. The key takeaway, according to the market observer, is that surviving Bitcoin’s cycles requires an extended time horizon, where traders shift from seeking quick gains to disciplined accumulation.
Market Strain and a Clash of Narratives
The “Bitcoin is a scam” framing has landed at a time the asset is entering one of its longest “extreme fear” readings, according to market trackers, giving critics fresh ammunition while reinforcing the psychological argument raised by supporters. Recently, prominent economist Steve Hanke claimed the asset has “zero fundamental value,” framing the current downturn as proof of a failing system.
The flagship cryptocurrency has fallen nearly 31% from its all-time high and briefly dipped near $85,000 earlier this week before rebounding toward $88,000, only to slip back to around $87,000 earlier today. According to veteran analyst PlanB, selling pressure is split between long-term holders still shaken by 2021, technical traders watching momentum indicators, and cycle-focused investors expecting further downside.
On the other side are buyers focused on fundamentals and institutional adoption, creating what he described as a stalemate until sellers exhaust themselves. That tug-of-war has kept Bitcoin lagging traditional assets in the one-year window, with data shared by Perera showing the digital asset with an ROI of -15% compared to Gold’s +65% and the S&P 500’s +14%.
However, over longer periods, BTC has significantly outperformed the two, starting at +422% ROI in the last three years against gold’s +141% and SPX’s +49%. Since its invention, BTC has achieved a return of more than 2 million % while its traditional counterparts have respectively only managed +167% and +447% in that time.
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