I’ve written before about cryptocurrencies when they were growing, so I thought it only right that I also comment on them when they are falling. Bitcoin is now trading at less than half of what it was at last November. It’s gone from a peak of $69K/coin down to just $30K.
That’s a sad drop for a digital currency that was supposed to help protect against inflation. With inflation topping 8%, I would have expected cryptos to be performing well in 2022. Of course they grew so fantastically well in 2020 & 2021, maybe they had no where to go but down?
That is the problem with assessing cryptocurrencies, in my mind – they are so dynamic and new that it’s hard to know what the baseline of their value should really be.
Was it last November when Bitcoin hit its $69K peak? Or, was it pre-COVID 2020, when it was $9K. It has either outrageously crashed, or incredibly topped Wall Street over those two periods. The asset is really too volatile to properly assess it.
My personal reference point is June 2017 when I made my ‘hobby investment’ into cryptocurrencies. That makes me look like a genius. My portfolio of Bitcoin & Ethereum has gone UP over 490% since then. I could obviously weather quite a few years of nasty inflation with those returns.
If nothing else, 2022 should be a reminder of how speculative this market is. For some reason that lesson is easier to understand when values fall than when they are going up. Still, I think it is highly unlikely that cryptos are blowing away and that this is their last chapter.
I still believe they are as likely to go to $1M/coin as they are to go to $0. What says you?
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