Crypto Investing Perspective: The Good and The Bad

Authored by Kelly Chambers
Kelly Chambers

Kelly Chambers

Published May 19, 20222 mins
blog-good-bad-1200x1200

The world of crypto has been a world of change in 2022. Rather than getting caught up in short-term price movements, let's look at two of the major themes so far this year, one negative and one positive. 

The Bad: A Bewildering Bear Market

Let's state the obvious and acknowledge the crypto bear market that we are currently in. Crypto markets are down YTD (as of May 16, 2022), with Bitcoin down about 36%. Most recently, the market was shocked by the UST stablecoin de-pegging which followed a rough few months driven by inflation, Fed rate hikes, and the war in Ukraine. But it's not just crypto—the S&P 500 is down around 16% and the NASDAQ is down around 25%. As reported by the NYTimes, Bitcoin has demonstrated a higher correlation to tech stocks in 2022. For investors across asset classes, 2022 has been difficult to navigate, and looks like it will bring continued uncertainty with a global conflict and ongoing inflation. These are great examples of why we say investing in cryptocurrency is highly speculative and only suitable for investors who can bear the risk.

The Good: More VC and Institutional Investment

Maybe less obvious to the average investor is the flood of venture and institutional money flowing into the industry.  We've seen record breaking venture capital investment into crypto and the wider Web3 space in 2022, outpacing 2021 by 321% in Q1 year-over-year. This is a positive sign for crypto's long-term adoption as VC money is attracted to potentially high-growth industries. On the institutional side, 2022 has been busy, with firms like Goldman Sachs and Bridgewater active in crypto. And most recently an investment from Wells Fargo, Citigroup, and BNY Mellon into institutional crypto trading firm Talos. Long-term, VC and institutional involvement should help the crypto industry mature.

A Time for Learning

Now is a time for stepping back to gain more perspective. Set aside time to assess how your investments fit into your overall portfolio. Take a look at all Makara Baskets or enhance your knowledge with our Crypto EDU articles.  


DISCLOSURE:
Argonaut Asset Management Inc. (d/b/a “Makara”) is a wholly-owned subsidiary of Betterment Holdings, Inc., and an affiliate of Betterment LLC.This above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and cryptocurrency is only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns. Purchases or holdings of cryptocurrency are not FDIC or SIPC insured. Any links provided to other websites are offered as a matter of convenience and are not intended to imply that Betterment or its authors endorse, sponsor, promote, and/or are affiliated with the owners of or participants in those sites, unless stated otherwise.
Makara is an investment adviser registered with the US Securities and Exchange Commission. Registration as an investment adviser does not imply a particular level of skill or training. Makara exclusively provides investment advisory services related to investing in cryptocurrencies and other digital assets. Makara is not a broker-dealer, exchange, custodian, or wallet provider, and is not intended for frequent trading activity. Investing in digital assets is highly speculative and volatile and Makara is only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns. Past performance is not a guarantee of future results. For more complete disclosures and information about how Makara works, please visit our Terms of Service and FAQ.

Authored By
Kelly Chambers

Kelly Chambers

Kelly Chambers is the Senior Director of Marketing focusing on crypto investing at Betterment.