Being a crypto investor is not for the faint-hearted as the global crypto market has been a blood-bath over the last 12 days, falling nearly 50%, from highs of $2.6 trillion in mid-April to $1.3 trillion at time of writing. Bitcoin traded as low as $32k on Sunday, a steep fall from the high of $63k last month. (Really tho how is crypto any different than meme stocks?) The descent began when the decentralized world’s most centralized figure, Elon Musk tweeted that Tesla would no longer accept Bitcoin over environmental concerns. That was followed by China cracking down on cryptocurrencies, banning financial institutions from accepting them, and pledging further regulations on "bitcoin mining and trading behavior.” The U.S. Treasury also announced that it would require stricter crypto compliance with the IRS.
The crypto world is no stranger to volatility (7 times more volatile than the stock market over the last month) but the latest armageddon lowers the appeal for institutional investors. A J.P. Morgan report highlighted that institutional investors were dumping bitcoin in favor of gold. The “crash” still might not be over as Cathie Wood once said "You never know how low is low when a market gets very emotional."
Short Squeez Takeaway: The recent events have highlighted Bitcoin’s ESG problem and reliance on China (accounts for 70% of the world's crypto supply), and these issues will need to be addressed for Bitcoin to be more widely accepted as a store of value. Separately, for all of you who bought at the top and cannot stop thinking about how much money you’ve lost (e.g. buying Ethereum at $4,200 like we did), we would recommend reading Psychology of Money, which we guarantee will give you some much needed peace of mind in times like these. #HODL