Crypto Crash of Early 2022

What Happened During the Crypto Crash Earlier this Year?

At the start of 2022, those heavily invested in cryptocurrency experienced a shock to their portfolios when all of the most popular coins steadily decreased in value.  

The most popular coin, Bitcoin, fell from a November high of $67K USD to a low of $35K USD on January 22, a loss of more than 40%. Ethereum, the second most popular coin, fell by 50% from $4.8K USD to $2.4K USD. 

Volatility is nothing new to crypto investors, but this particular dip wasn’t just a dip at all, but rather the leveling out of a roller coaster that peaked back in November of 2021. 

While they have rebounded some, the coins that crashed back in January have still yet to fully recover, and the crash reportedly wiped out more than $1 trillion USD in wealth. 

What Sparked the Crash? 

The sell-off of crypto assets likely reflects, in part, the ongoing uncertainty surrounding the sector, but more so, reflects the uncertainty surrounding the present market, given interest rate hikes that are soon to come. In an uncertain market such as this, investors tend to shed riskier assets and flock to safer options. 

Case in point, Bitcoin, Ethereum, and other coins weren’t the only ones to fall; The S&P 500 also steadily fell in January.

The Effects of the Crash

Notably, and perhaps, importantly, the crypto crash of early 2022 cracked the golden goggles through which many investors had viewed cryptocurrencies. For novice investors, in particular, an awakening was past due. What drew people to crypto first was what they could stand to gain, and now, they realize what they stand to lose, perhaps for the first time. 

For others, the crypto crash provided an opportunity to “buy the dip.” As crypto soared higher and higher over the months prior, this opportunity was welcome to those who have been eager to gain a stake in the game. 

However, for the sophisticated investor who has weathered many highs and lows, the crash may merely be another blip on their radar. 

A crash of this magnitude has also led to a call for stricter regulation of the cryptocurrency sphere. However, the response from Washington is still yet to be seen. Soon, though, the U.S. is expected to issue more rules surrounding cryptocurrencies and crypto markets that are in line with other countries’ current regulations.

Whether you remain optimistic about the future of cryptocurrency, believe it’s time for increased regulation, or are one of the 5 in 6 who hasn’t yet invested in crypto, there are other exciting ways to allocate your portfolio. By becoming an Accredited Investor, you can access private markets. 

This was made possible by the JOBS Act, which allows companies to publicly solicit funds and advertise while still conducting a private offering. All investors must meet the accredited investor definition, and the company raising money has to verify that their investors are truly accredited investors.  

Should you meet the criteria, becoming an accredited investor may be an incredible way to diversify your portfolio, in addition to crypto or not.