Traders’ flight from risky investments has halved the price of bitcoin and other cryptocurrencies, wiping out more than $1 trillion worth of digital money since November.

Wild swings are fairly common with cryptocurrencies, but even seasoned investors were left reeling as bitcoin dropped 29% over a seven-day losing streak that just ended as a stablecoin—one part of the crypto world that touted its stability—unexpectedly crashed.

Investors are staring at an inflection point in the financial markets as interest rates rise and inflation rages, and they are responding by selling risky assets.

For crypto, it has been a volatile journey into the depths.

Value in circulation, select cryptocurrencies
NOVEMBER 2021
A group of U.S. federal agencies say they plan to begin delineating how banks can legally get involved in cryptocurrencies.



Source: CoinMarketCap
Last year cryptocurrencies were on fire and appeared to gain more legitimacy after years of being considered a fringe, speculative product. Tesla Inc. TSLA 5.71% said it bought $1.5 billion in bitcoin, pushing prices higher. Coinbase Global Inc. COIN 16.02% listed its shares in the first major bitcoin-focused public offering.

In November, bitcoin and ethereum, two of the most popular cryptocurrencies, reached all-time highs. Bitcoin’s value at 5 p.m. on Nov. 9 was $67,802.30; ethereum was worth $4,800. They are now down 58% and 60%, respectively, from those levels.



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Cryptocurrencies were falling even before last week, victims of sky-high inflation. Bitcoin and other digital currencies have been talked about as inflation hedges. But the ripple effect has played out differently. Surging inflation is spurring the Federal Reserve to raise interest rates faster, which investors believe will cause a slowdown in economic growth. The result: Investors are unloading risky assets, including cryptocurrencies.

Also exacerbating the losses is that crypto trading, originally an individual-investor game, is now dominated by institutional investors such as hedge funds. Those who have sought diversification in crypto have been caught wrong-footed.



As the price has moved lower, both individual and institutional investors alike have been bowing out. When Coinbase reported its first-quarter results late Tuesday, it revealed it is hemorrhaging users. By the end of trading Thursday, Coinbase’s stock was 82% below where it closed after its first day of trading just over a year ago.

LINK: https://www.wsj.com/articles/h...x-months-11652434202

A lot of people got insanely rich and a lot of people are wanting to jump off a building right now.

I'm guessing the Drug cartels took a beating.

So the ones that jumped ship first probably came out good.

Investing in an alternative type of product without an intrinsic value. What could possibly go wrong.

Every time the true believers say "this time it's different" and "the fundamentals have changed", it's not different and fundamentals matter.

Crypto is not currency because currencies need a stable value. It is not an investment because investing requires a productive asset or something of actual value. The people who got in early and got out a little while ago may have gotten rich. Everyone who got in late is going to lose. That's how Ponzi schemes work.

^^^^ Exactly!

Then there are people like me who are kicking themselves for not putting in just a $1000 into bitcoin back around 2008 when bitcoin was $30 each which was what one guy paid for his pizza.

I'm sure that sucker is kicking himself too. That makes me feel better now.

quote:

Originally posted by Shaql:
^^^^ Exactly!

Just wait till Uncle Sam rolls out that new programmable digital currency. It will be a real hoot.

Just because something is new doesn’t mean it’s better

quote:

Originally posted by Rey HRH:
Then there are people like me who are kicking themselves for not putting in just a $1000 into bitcoin back around 2008 when bitcoin was $30 each which was what one guy paid for his pizza.

I'm sure that sucker is kicking himself too. That makes me feel better now.

I have a buddy who was buying as much as he could afford when it was in the low hundreds, swearing that it'd make him rich. I told him he was foolish. He cashed out in the mid50K range, laughing all the way to the bank. He made millions.

Me? Kicking myself in the ass? Yeah...just a little bit.

And just because it's down doesn't mean it's dead.

It got pumped up by the fed pumping out cheap cash. Now's the fed is starting, or at least threatening, to pull the chain on money supply. That stopped the party, at least for now.

The Fed wants to calm down inflation. That requires causing a recession. But once in the recession, they'll open up the money spigot again. That may start the party back up.

On a related note, is NFT an abbreviation for "New Format Tulip"?

NFT: Non-Fungible Token

Here is an article from Forbes about them.

At the risk of sounding over-skeptical, it seems to me like an imaginary product often purchased with imaginary currency. But maybe that's because I just don't understand it all well enough.

[/QUOTE]Just wait till Uncle Sam rolls out that new programmable digital currency. It will be a real hoot. [/QUOTE]

That's right. Total control. Trying to buy a gun, or anything else they don't want you to have or to support, transaction declined.

quote:

Originally posted by Gustofer:

quote:

Originally posted by Rey HRH:
Then there are people like me who are kicking themselves for not putting in just a $1000 into bitcoin back around 2008 when bitcoin was $30 each which was what one guy paid for his pizza.

I'm sure that sucker is kicking himself too. That makes me feel better now.

I have a buddy who was buying as much as he could afford when it was in the low hundreds, swearing that it'd make him rich. I told him he was foolish. He cashed out in the mid50K range, laughing all the way to the bank. He made millions.

Me? Kicking myself in the ass? Yeah...just a little bit.

Go ahead and kick yourself for not betting it all on the 80:1 winner of the Kentucky Derby. Same thing, more or less. Hindsight is 20:20. The people that just lost 98% are kicking themselves too.

There are many get-rich-quick schemes out there, and some people do get rich, but most do not. It has nothing to do with wisdom or good decision making. It's just luck. But the risk/return tradeoff is such that you are much more likely to lose than win. Proper investing in highly diversified assets (actual assets) is the only that that works in the long term and balances risk and return appropriately.

quote:

Originally posted by Plugugly:
On a related note, is NFT an abbreviation for "New Format Tulip"?

I think so, and you can toast to it with the new finance cocktail, The South Sea Bubble. What could be better?

quote:

Originally posted by Lefty Sig:

quote:

Originally posted by Rey HRH:
Then there are people like me who are kicking themselves for not putting in just a $1000 into bitcoin back around 2008 when bitcoin was $30 each which was what one guy paid for his pizza.

I'm sure that sucker is kicking himself too. That makes me feel better now.

Go ahead and kick yourself for not betting it all on the 80:1 winner of the Kentucky Derby. Same thing, more or less. Hindsight is 20:20. The people that just lost 98% are kicking themselves too.

There are many get-rich-quick schemes out there, and some people do get rich, but most do not. It has nothing to do with wisdom or good decision making. It's just luck. But the risk/return tradeoff is such that you are much more likely to lose than win. Proper investing in highly diversified assets (actual assets) is the only that that works in the long term and balances risk and return appropriately.

Umm... $1000 back then for me wasn't all that I had. I would be surprised if anyone bet all on Rich Strike either. It's not about getting rich quickly but recognizing an opportunity. It's not luck since no one is betting on just a random roll of the dice.

If you have a sure fire recipe for proper investing in highly diversified assets that you've proven for yourself, then please do share. Telling people to invest in highly diversified assets is the same as telling them to buy low and sell high.