Is crypto up for a reality check this winter?

Investing in crypto over the years has brought wealth to many over the years, but the industry has also seen billions of dollars being wiped out in a matter of hours, leaving risky investors hanging. Many believe digital assets and gold are ‘inflation-proof,’ but 2022 has shown that this might not be the case, especially when it comes to crypto.

Inflation has been ravaging the US over the last two years, but cryptocurrencies such as Bitcoin and Ethereum have yet to live up to the growth expectations of many investors. Digital gold started growing well at the beginning of the covid-19 pandemic and continued steady growth for about a year. Bitcoin managed to hit its all-time high of over $64,000. However, the crypto industry gradually faded as the pandemic progressed. Bitcoin had decreased nearly four times since it peaked, with Bitcoin being available to purchase for as low as $15,000 in November this year. The price is pretty good for crypto enthusiasts who invested before the pandemic, but it is a blow for those who decided to enter the crypto world in late 2020, 2021, and 2022.

The upcoming winter might be challenging for digital asset holders as inflation continues to plow through the US economy while the overall crypto value slowly decreases. The multiple scandals in the industry are also not helping the overall price of popular crypto tokens. This month FTX filed for bankruptcy after a hacker stole customer crypto assets worth hundreds of millions of dollars. Investors fear that this may happen to other crypto exchanges. This year we also saw the Luna / Terra that wiped-out billions in value and the cyber-attack of Axie Infinity that allowed a hacker to walk away with more than $600 million. Investors are obviously getting spooked, and more and more of them are choosing to fight inflation by investing in the less volatile real estate and stock markets.

The crypto world might be up for a reality check this winter as leading crypto players such as Bitcoin and Ethereum are slowly crippling back to pre-pandemic values, but food and energy prices continue to climb. During the summer of 2022, the inflation rate in America reached 9.1%, the highest level in the last four decades, and prices are not showing any signs of slowing down. The crypto roller coaster rides might have been profitable to many. Still, the cryptocurrencies might not be as ‘inflation-proof’ as many initially thought, nor the stock options associated with crypto exchanges such as Coin Base and more traditional stock broker apps with crypto options such as Robin Hood.