Bitcoin, and crypto as a whole, has taken a humongous tumble since November of 2021 from $67,617 to a floor of $19,047 a staggering 72% loss if you had bought the top. Ethereum suffered a similar 78% loss and many other cryptos (alt coins) crashed up to 90-99%. Many players have been “wiped out” with the list including big names like Celsius, Voyager, Three Arrows Capital, Terra Luna Foundation, and many other smaller players. Some speculate some big exchanges are secretly insolvent, but no confirmed sources have said anything beyond rumors. Showing the old adage “when liquidity is most needed it disappears” exists for a reason.
Now that all the bad debt has been washed from the system will the crypto ecosystem begin healing? Not necessarily. Bitcoin, as an alternative currency (or commodity if you believe in court decisions like tomatoes being a vegetable and not a fruit), is weakened by a strong dollar which we are seeing.
The FED has not reversed course on raising rates, so the dollar continues to strengthen despite international variables weakening it (specifically actions in OPEC+ countries and China). Treasury I bonds are offering 10% yields which even my most ambitious MREITs cannot match. All investments carry some risk, but bonds have traditionally been a safe harbor, so how can riskier investments like stocks and Bitcoin compete when they can’t offer the growth or the yield in a down economy? Money flows are a complex balancing act and since this is a small blog and not a Singapore based hedgefund I can’t give you pinpoint analytics on when the FED will rebalance the scales and push investors back toward riskier assets to chase yields, but seeing Bitcoin has already taken a substantial haircut and has slightly started to make gains it might be worth looking into to beat the crowd when the FED finally does reverse course or the dollar weakens for whichever reason.
Like the title says you don’t need much to be someone with “a lot” of Bitcoin just being a wholecoiner puts you above 98% of the world.