Crypto is, of course, not dead. But the world of cryptocurrency could be considered seriously injured. Here are a few stats from 2022:
- Bitcoin, on fire in 2021, has seen its price drop over 75% from its record high. Since only May 2022, Bitcoin’s value is down by half.
- Coinbase, the first publicly listed and largest US cryptocurrency exchange, has seen its stock drop 80% from the time of its listing.
- Quarterly retail trading volume on Coinbase fell 74% by mid-year, from 2021 highs.
- Coinbase has also come under increasing regulatory scrutiny, adding to its woes.
- According to research firm, CryptoCompare, asset managers saw investors withdraw nearly $20 billion from crypto in November alone, bringing certain asset levels to lows not seen since 2020.*
- Speculative activity in cryptocurrencies has plummeted. Speculation involves those who borrow cryptocurrencies in order to buy even more crypto, paying dear sums of interest to borrow. Demand to borrow Bitcoin for speculation is currently near zero.
- High profile crypto exchange, FTX, filed for large-scale bankruptcy, triggered by crashing crypto prices and cratering trading volumes, amidst questionable activities by the company and its founder.
- NFT (non-fungible token) sales came to a near-standstill in 2022. NFTs are “units of data stored on digital ledgers, or blockchains.“**
For a bit of perspective, compare several of these drops to the 85% fall in prices of US bank stocks (some of the most liquid and quality traded securities in the world) from peak to trough in the 2007-2009 financial crisis.* Volatility with lack of warning is a hallmark of markets.
Amidst the recent “crypto crash” and chaos surrounding the FTX collapse are experienced voices urging focus on the promising opportunities and innovation present particularly within the world of blockchain, and within blockchain, cryptocurrencies. One of these voices, David Solomon, the Chairman and CEO of Goldman Sachs, in a recent opinion piece for The Wall Street Journal urges not writing off blockchain. He points to transparency and universal access as just two of the positives.
Crypto is still in its nascent stages and certainly not “mainstream.” Risk is uber-present, but crypto is not dead. It may well pay to walk, not run, to invest in cryptocurrency and blockchain technology while they resuscitate themselves.
BUYING CRYPTOCURRENCIES IS EXTREMELY VOLATILE AND RISKY.
CRYPTO EXCHANGES, CRYPTOCURRENCIES AND THE BITCOIN ETF ARE **NOT** FDIC INSURED IN ANY WAY.
*WSJ.com. Paul Vigna, James Mackintosh.