Will Crypto Recover?


Hey Taylor - I know people are avoiding crypto like the plague right now, but do you think there will be an upswing? Like, is this the time to buy?

Hey Ashton - When you hit rock bottom, the only place to go is up, right? That’s the thinking some people have after a brutal 2022 for the crypto markets, though I’m not entirely convinced that’s how the digital currency trade will work. When we try to apply conventional wisdom to something as unconventional as cryptocurrency, things get a little muddy.

1. Understand what’s happening. Before we decide prices have to go back up, you need to think about why they fell in the first place. There are a lot of external factors, like inflation, a lingering pandemic, the war in Ukraine, etc. There were also rate hikes in the U.S. and a borderline economic disaster in the U.K. Even though crypto is perceived as the alternative to traditional finance, it still trends pretty closely with the stock market because people are using the same money to invest in Bitcoin as they are their IRAs and 401(k)s. However, on top of that, we saw how hot crypto was running to start out the year, even though it was still mostly speculative. There were like three Super Bowl commercials for different crypto trading sites, some of which have since declared bankruptcy. Essentially, crypto and NFTs got a little too big too fast, and now people are coming to terms with that.

2. Consider solutions. With rate hikes slowing down, there’s renewed life in the markets. This will improve cash flow and a lot of that money will find its way back into crypto. Personally, I think the next surge, assuming there is one, will be very telling as to which parts of the blockchain are here to stay and which investments are paper tigers. Lots and lots of money has been lost on those so-called meme stocks and coins, so more people will likely be wary of that happening again. The smart money will go into the coins attached to greater projects and developments. People want more than just an invisible coin with a price tag—they want to see at least some identifiable value.

3. Priorities. Crypto has been a huge wealth generator, but when times get tough, people turn to the things they trust—commodities, safe stocks, real estate, and the like. People are facing lots of hardships around the world, so crypto has taken a backseat to savings and safer investing. In the short term, I don’t see a huge shift in that approach.

Don’t give up on crypto, but don’t bet the farm on an eminent comeback just yet. Let’s see where interest rates and inflation go before we get back on the Bitcoin train. Good luck, Ashton!