Most Cryptocurrency, Technically A Ponzi Scheme

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BY SRH

Every cryptocurrency is a Ponzi scheme, but the naive investors can only see the enormous profits made by the other victims, so the cycle continues until every crypto system falls.

Most cryptocurrency is technically a Ponzi scheme. A Ponzi scheme is fraud in which earlier investors are paid with money from newer investors, while returns are falsely presented as coming from legitimate earnings. Some crypto projects and platforms have used that model, but cryptocurrency itself is a broad category of assets and technologies; many coins rise or fall in value without an organizer paying investors from new deposits. That doesn’t make them safe or valuable—crypto can still be highly speculative, volatile, or fraudulent.

Coinbase posted a quarterly loss in the final three months of 2025—its first loss since the third quarter of 2023. A flight to gold has in part led to lower trading volumes and a selloff in the cryptocurrency market.

The San Francisco-based company endured a net loss of $666.7 million, or $2.49 per share, during the quarter ending Dec. 31, 2025. LSEG data shows many analysts estimate a profit of 55 cents per share.

Digital assets declined sharply over the quarter after reaching record highs in early October 2025. Bitcoin has almost halved since its Oct. 6 peak. Bitcoin fell below $82,000 in November 2025, an approximately 30 percent decline from its all-time high of $126,000 earlier that month, erasing the year’s gains.

Crypto is cyclical, and experience tells us it’s never as good, or as bad as it seems,” Coinbase said in its shareholder letter published on Feb. 12.

In February 2025, the market lost $800 billion in market capitalization before a slight rebound. Bitcoin recovered to more than $86,000 by late that month. The sector has remained in a bear market despite a White House supportive of digital assets.

Investor divestment from spot bitcoin exchange-traded funds (ETFs), which drove much of the rally in 2025, helped to fuel the decline.

U.S. spot bitcoin ETFs demonstrated net withdrawals of $7 billion in November 2025, $2 billion in December 2025, and more than $3 billion in January.

Coinbase’s transaction revenue plummeted to $982.7 million from $1.56 billion a year prior, largely due to the more than 45 percent drop in consumer transaction revenue. The company’s shares climbed 1.2 percent in volatile after-hours trading. They are down nearly 40 percent for the year.

Offsetting some of the pain, subscription and services revenue grew 13.5 percent to $727.4 million, driven by expansion in stablecoin operations. Stablecoin revenue surged to $364.1 million from $225.9 million.

Stablecoins, digital tokens representing traditional assets such as the U.S. dollar or government debt, have been hyped as a modern rail for traditional finance. Coinbase earns revenue from USDC, a stablecoin issued in partnership with New York-based payments technology company Circle. USDC generates interest on the underlying U.S. dollar reserves.

The Trump administration has positioned stablecoins as an alternative to Central Bank Digital Currencies as well as a way to defend dollar supremacy.

People involved in illegal commerce, such as drug dealers, terrorists, and others, utilized and created these coins. How much more cash have the bad guys made off of this trend? Consider the many times it has increased.