ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Crypto Channel
  2. 3 Reasons Crypto Has Stumbled and 1 Reason For Optimism
Crypto Channel
Share

3 Reasons Crypto Has Stumbled and 1 Reason For Optimism

Evan HarpJul 01, 2022
2022-07-01

Back in November of 2021, Crypto had over $3 trillion in market capitalization. Today it sits at $850 billion, a 70% drop.

The crypto winter has some investors worried that it might be a crypto ice age, but there’s cause for hope in all the doom and gloom. First, let’s look at what has gone wrong.

The Pandemic Era Was Unprecedented

When COVID lockdowns began in March of 2020, economies shut down. People were stuck at home, unable to spend money on restaurants, travel, or live events. This gave people with means the opportunity to put more of their money to work in investing.

The economic rebound was rapid and emphatic. Crypto benefited greatly. Though the pandemic is far from over, many people have started resuming normal activities. This means the time, money, and energy they were putting into investing in exciting opportunities like cryptocurrency is now being placed elsewhere. Part of the crypto crash rests in losing the safety net the global pandemic provided.


Content continues below advertisement

Correlation to the Stock Market

Crypto’s most ardent supporters touted it as an interesting diversifier that didn’t behave like other asset classes. However, throughout 2022 the correlation between cryptocurrencies and the broader stock market has become increasingly apparent.

Add into the mix that the stock market is experiencing a tidal wave of volatility and it is no surprise that cryptocurrencies, innately volatile as they are, are experiencing choppy waters.

Geopolitical Earthquakes

The war in Ukraine has sent ripples through the global economy. Supply chains have remained in disarray for months. Rising far-right extremism has become a global phenomenon. The effects of climate change are starting to be felt around the world.

In times of great uncertainty, investors tend to shy away from riskier assets. Conventional, proven asset classes do better when the future looks bleak and uncertain. Cryptocurrencies are innately risky. This risk is also part of their appeal, as their potential for long-term growth is unparalleled, but for them to thrive investors need to feel comfortable enough to roll the dice. Given the state of the world right now, it’s easy to see why that hasn’t been the case.

Signs of Crypto Spring

There is one major reason why crypto spring is inevitable. Namely, we’ve seen this movie before.

Crypto is no stranger to these kinds of bear markets. In June 2011, Bitcoin lost 99% of its value off of the Mt. Gox disaster. In August of 2012, there was a 56% crash. As recently as 2018, there was an 84% drawdown as many countries weighed banning bitcoin.

All of these stories ended the same — with the bear market providing a fertile ground for building on and iterating the technology, leading to breakthroughs and innovations which in turn bring investors back in. The market cap losses look dismal, but the reality is that the crypto ecosystem is as strong as it has ever been. New projects and technological advances are in the works, and institutional investors have retained their interest in the space despite its recent woes.

Now is an excellent time to get crypto exposure. There are a number of products that can do that, including the Invesco Alerian Galaxy Crypto Economy ETF (SATO ) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC ).

For more news, information, and strategy, visit the Crypto Channel.

vettafi.com is owned by VettaFi, which also owns the index provider for SATO and BLCK. VettaFi is not the sponsor of SATO or BLKC, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X