Elon Musk and the People's Bank of China were the perpetrators, but it may have been anybody.

Through past bouts of uncertainty, the cry from the bitcoin and crypto community was YOLO, or you just live once. That's a simple thrill-seeking mantra to repeat as stocks fall by the odd 10%. It gets more difficult to cling to when the price drops by 30% in a day and 50% in a month, and there is fear in the air.

Any downturn is a buying opportunity for true crypto believers, and there was a late rebound to reduce losses. And the rest of us, though, the signs of speculative excess have been present for some time. A simple yet revealing example is the posters that can still be seen in London and other big UK cities that read, “If you see bitcoin on the subway/side of a bus/billboard, it's time to buy.” No, the party is over, and the smart money has gone home.

Elon Musk and the People's Bank of China, an odd pairing, turned out to be the party poopers. The former said in February that he will accept bitcoin payments for Teslas but then changed his mind last week, citing (correctly) the heinous carbon footprint left by cryptocurrency miners. On Wednesday, the latter informed banks and other financial institutions that digital coins are not “real currency” and should not be accepted.

However, the prod may have come from anywhere. The difficulty in considering a cryptocurrency as an "asset" or "inflation shield" is that there is no intrinsic revenue or rate of return to serve as a valuation yardstick. That is also true of gold, the crypto crew's favourite comparator, but gold has been prized as a store of wealth for a few thousand years, which is an important distinction. Strings of programming code are now getting off in terms of durability.

Meanwhile, bitcoin's use as a currency is diminished if its price can fluctuate wildly in a single day. In the backdrop, there is concern that central banks would not allow their monetary mechanisms to be usurped by free-roaming anonymous payment systems, which China seems to have verified. Regulators are important, even though the underlying blockchain technology is genius.

Of note, this week's drama may be followed by a rebound the next week. Making firm assumptions would be foolish. Musk, possibly regretting his former job as a cheerleader, was doing his part for bitcoin by tweeting about Tesla's "diamond paws," implying that the firm would not be selling its holdings.

That's safe for him to claim, given that Tesla's $1 billion-plus in bitcoins accounts for about 5% of the company's Treasury assets. The psychology of those whose speculative positions are more stretched will undoubtedly shift. Fear of losing out will remain a theme, but the fear of being severely burnt will intensify. Wednesday sounds like a watershed moment.