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- The prices of most cryptocurrencies have been in a free fall lately, causing some people to think the bubble has burst.
- Crypto companies are also laying off thousands of workers, as the money quickly dries up.
- Can the cryptocurrency industry bounce back, like it has before? Only time will tell.
To be honest, it’s hard to write about Bitcoin at all these days. By
the time a single article is researched, written, edited, and published,
there’s a good chance some parts will have changed dramatically in the
previous 24 or 48 hours. The roller coaster world of cryptocurrencies
just moves so damn fast. It can be hard to keep up, even for those with a vested interest in the market.
It was only about six months ago, in November 2021, that the price
of Bitcoin hit an all-time high of just under $70,000 USD per coin. A
year before that, the price was about $15,000. With explosive growth
rates, plenty of early investors doubled or tripled their money (or
more). Yes, the cryptocurrency hype was an all-time high. Online
exchanges were popping up everywhere, encouraging you to buy Bitcoin,
Ethereum, Litecoin, or even Dogecoin. Matt Damon appeared in Super Bowl ads for Crypto.com, telling you that “fortune favors the brave.”
Frankly, you’d need to have been living under a rock to not have crypto-something shoved in your face.
The Crypto Recession
The price of Bitcoin and other cryptocurrencies has always been
volatile. It’s dropped dramatically before, only to rise back up.
However, the tail end of 2021 and most of 2022 (so far) has seen the
prices of most cryptocurrency in a free fall. Currently, the price of
Bitcoin is around $20,000 per coin and optimism is fading fast. So what
exactly happened?
Like any relatively new product or technology, the investing market
had a lot to learn about cryptocurrency. Unfortunately, plenty of people
sunk millions of dollars into these digital currencies without knowing
all the facts. Yes, some people bought in early, sold near the peaks,
and made millions. Others, unfortunately, bought into the hype. They
were told that Bitcoin would easily reach $100,000 per coin (or that
Dogecoin would get to $1.00 a coin), and all their crypto holdings would
go “TO THE MOOON!!11!”
Now plenty of people are left holding massive losses, unsure of what
to do next. Will the prices bounce back eventually, letting them break
even? Should they cut their losses and sell now, while there’s still
some value left? Or will the free fall of crypto prices continue, until
every remaining investor is left holding the bag?
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Security Concerns
Cryptocurrency is sort of like the Wild West of online investing.
There aren’t a lot of rules and regulations, so the whole scene is ripe
for scam artists. A recent study from the Federal Trade Commission (FTC) estimates that Americans alone have lost more than $1 billion in cryptocurrency-related schemes since the start of 2021.
Some of them bought into promising “investment opportunities,” only
to have their money vanish into the online ether. Others had legitimate
crypto holdings stolen from them in elaborate phishing or trading scams.
Close to $200 million was lost in “romance scams,” where scammers use
dating sites to dupe love-struck matches into sending them
cryptocurrency for some fake emergency expense.
“Crypto has several features that are attractive to scammers,” the FTC report
stated. “There’s no bank or other centralized authority to flag
suspicious transactions and attempt to stop fraud before it happens.
Crypto transfers can’t be reversed – once the money’s gone, there’s no
getting it back. And most people are still unfamiliar with how crypto
works.”
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