Nearly a century ago (1938) a married pair of sociologists, William and Dorothy Thomas, unknowingly launched one of the most frequently cited ideas of social science: “If men define situations as real, they are real in their consequences.” (Back then, “men” could still be used to mean men and women, even in a book coauthored by a woman.)

Of course, the idea was not a theorem but a powerful observation that has proved the best way to understand many otherwise puzzling behaviors. When I introduced it to my first-year college seminar on understanding public disasters, one student wrote an excellent paper on the infant formula shortage during Covid-19. The supply, it seems, was undiminished, but rumors of a shortage soon enough produced a real shortage that could not be offset by increased production because of the limited number and capacity of suppliers.

Some 50 years earlier, the Arab oil embargo had little effect on total petroleum imports to the U.S., if only because fully loaded tankers were already on the high seas when it was announced. Moreover, the fuel market was global, allowing almost seamless reallocation from Europe to the U.S. There were other contributing factors (price controls and political influence in allocation). But the primary driver of shortages was the belief in reduced supply that prompted drivers to keep their tanks filled.

I thought of these events when reading an article that I could not have imagined seeing in a mainstream source a year or two ago, “Should You Invest in Crypto Now?” on CNN.com. Crypto is a favorite enthusiasm of the Trump administration (and marketing his own has helped build the president’s wealth), so CNN was surely leery of potential scams.

The tone of the article is not enthusiastic advocacy, but it isn’t skepticism either. It is perhaps best described as crypto-curious, noting correctly that “the Securities and Exchange Commission now regulates spot bitcoin and ethereum exchange-traded funds. Coinbase, the crypto currency exchange, is now on the S&P 500.” Less accurately, the article describes crypto coins as “a store of value” — a dubious proposition since prices gyrate constantly and unlike diamonds and precious metals that have industrial uses, they’re worth no more than what the next customer will pay.

That last clause is worth noting. What the CNN report and similar pieces suggest is the power of bottom-up demand. As more and more people hold crypto or would like to include it in their portfolios, once-skeptical advisors are under pressure to accommodate them or risk losing business. The underlying objections to crypto have not changed: absence of inherent value, no state support, risk of manipulation and fraud, and insecure storage. 

And let’s not forget environmental damage: The total quantity of Bitcoin, the granddaddy of cryptocurrencies, is limited by the voracious use of digital processing capacity needed to “mine” it. Crypto-miners’ computers consume roughly the amount of electricity used by the entire Swedish economy.

What has changed is the public attitude. For all the indignation at the crypto ventures of Donald Trump and Elon Musk — STRUMP and Dogecoin — the creeping legitimation of crypto has been underway for years. President Biden’s Executive Order 14067 paid lip service to the environmental issue, but seemed more concerned about “enhancing United States economic competitiveness” than saving the planet from global warming. 

A few years ago, some giants of Wall Street were still insisting that the emperors lacked clothes. Their premier spokesman was Warren Buffett’s legendary partner in Berkshire Hathaway, the late Charlie Munger. Invoking past failures like the South Sea Bubble and praising the Chinese government for its crypto ban, Munger blasted crypto as “a gambling contract with a nearly 100% edge for the house.” And in contrast with the Biden order’s mushy effort to have it both ways, Munger pleaded forthrightly for a ban.

Fat chance. Holders of crypto are well funded (understatement of the century) and passionately engaged in both creating demand and brushing aside regulators. The crypto bros seeded the 2024 election with hundreds of millions to keep both sides of the aisle sweet. Even Warren Buffett, who once dismissed Bitcoin as “rat poison,” decided (briefly before his retirement) to join ’em if you can’t beat ’em. His mega-conglomerate, Berkshire Hathaway, took a flyer in a Brazilian crypto-holding venture called Nubank, netting $250 million when Berkshire Hathaway liquidated its holdings. 

Other Wall Street stalwarts have been less tentative in what can only be called respectability creep. Take JPMorgan Chase. It is now offering exchange-traded funds in Bitcoin, though it apparently owns no crypto of its own. As its CEO Jamie Dimon said, “I don’t think you should smoke, but I defend your right to smoke. I defend your right to buy Bitcoin.” Another giant, Fidelity Investments, offers a no-fee Bitcoin IRA and a Bitcoin ETF. Charles Schwab is planning a crypto trading program for 2026. 

Outside the financial sector, some 60 public companies with no direct reason to own crypto are buying digital assets to make themselves more attractive to investors. And the strategy is working. Announcements of purchases, the Wall Street Journal reports, “often send the companies’ shares flying.”

As demand grows, it is not surprising that some traditionally risk-averse financial advisors are coming around to suggesting at least a small asset allocation to crypto. There are still holdouts, notably the mutual fund giant Vanguard, which seems to share Munger’s views. Otherwise, the barbarians are no longer at the gates but already scaling them. 

I broached the question of crypto as an investment vehicle to a friend, a global IT consultant. Skeptical as he was about crypto for all the usual reasons, he began to move his palms closer together to suggest that Bitcoin was coming closer to the confidence of fiat money like the U.S. dollar. As confidence in most institutions wanes and the world is wondering whether the U.S. will ever again balance the federal budget, crypto is enjoying a new springtime, for now.

I would add a caveat, though: the strong identification of President Trump with the movement has increased not only the prices of cryptocurrencies, but the political risks. If the president somehow skirts recession and war, wins favorable tariff concessions and achieves a virtual third term through a proxy, crypto may silence the haters. A different outcome, though, will more than vindicate skeptics. Either way, the Thomases will be right: perceptions will continue to create realities.