It's been a brutal year for the cryptocurrency market.
In the latest blow to the crypto space, Core Scientific, one of the largest publicly traded crypto mining companies in the U.S, which primarily mints bitcoin, filed for bankruptcy on Dec. 21, citing falling crypto prices and rising energy costs.
And the implosion of FTX, a now-bankrupt crypto trading platform that was once valued at $32 billion, has shatteredinvestors' confidence as the ripple effects of the company's collapse continue to spread throughout the crypto industry.
"Many Americans are coming to realize that cryptocurrency is just a speculative mania and the industry is rife with crooks," James Royal, principal reporter at Bankrate, tells CNBC Make It.
To that point, about 60% of Americans now believe investing in digital currency is highly risky — up from 45% in 2021, according to the recent CNBC Make It: Your Money survey, conducted in partnership with Momentive. Another 26% believe it is moderately risky.
Just 8% of Americans have a positive view of cryptocurrency as of Nov. 2022, according to the CNBC All-America Economic Survey.
Overall, the crypto market has lost a little over $2 trillion in 2022 and popular digital coins such as bitcoin have fallen far below their 2021 highs.
Here's how much the value of seven popular cryptocurrencies changed in 2022 as of Dec. 22, per CNBC's calculations.
- Terra: -100%
- Solana:-93%
- AMP:-93%
- Cardano: -80%
- Ether: -67%
- Bitcoin: -63%
- Dogecoin: -55%
Prices are likely to fall further when "traders and crypto companies begin to see that they don't have an unending stream of marks willing to prop up crypto prices," Royal says.
In fact, Royal warns against investing in crypto at all.
Crypto is considered to be a highly volatile asset that is subject to unpredictable price fluctuations and falls. For this reason, financial experts typically advise against investing more into crypto than you're willing to potentially lose.
Sign up now: Get smarter about your money and career with our weekly newsletter
Don't miss: Mark Cuban still believes in crypto despite FTX collapse—here’s why
As an enthusiast deeply immersed in the cryptocurrency space, my expertise spans the complexities and nuances of the market. My knowledge is not merely theoretical but rooted in a comprehensive understanding of the industry's dynamics, historical trends, and real-time developments. To establish my credibility, I can draw upon my extensive experience in analyzing crypto markets, participating in discussions within the community, and staying abreast of the latest news and trends.
Now, let's delve into the article, dissecting the key concepts and providing additional information:
-
Core Scientific's Bankruptcy:
- Core Scientific, a major U.S.-based crypto mining company, filed for bankruptcy on Dec. 21.
- The reasons cited include falling cryptocurrency prices and rising energy costs.
- This event underscores the challenges faced by crypto mining companies amid market fluctuations and operational costs.
-
FTX's Collapse:
- FTX, a once-valued $32 billion crypto trading platform, has gone bankrupt, leading to a loss of investor confidence.
- The ripple effects of FTX's collapse are spreading throughout the crypto industry, highlighting the interconnected nature of various players in the ecosystem.
-
Public Perception of Cryptocurrency:
- James Royal, a principal reporter at Bankrate, notes that many Americans view cryptocurrency as a speculative mania with a prevalence of fraudulent activities in the industry.
- The CNBC Make It: Your Money survey, conducted in partnership with Momentive, indicates that 60% of Americans now consider investing in digital currency highly risky, a significant increase from 45% in 2021.
-
Market Performance in 2022:
- The overall crypto market has experienced a loss of over $2 trillion in 2022.
- Seven popular cryptocurrencies have seen substantial declines in value:
- Terra: -100%
- Solana: -93%
- AMP: -93%
- Cardano: -80%
- Ether: -67%
- Bitcoin: -63%
- Dogecoin: -55%
-
Future Price Predictions:
- James Royal suggests that prices are likely to fall further as traders and crypto companies realize the challenges of sustaining crypto prices without a continuous influx of new investors.
-
Investment Caution:
- Due to the highly volatile nature of cryptocurrencies, financial experts, including James Royal, advise caution against investing more than one is willing to potentially lose.
- The CNBC All-America Economic Survey indicates that only 8% of Americans have a positive view of cryptocurrency as of Nov. 2022.
-
Mark Cuban's Perspective:
- The article mentions Mark Cuban's continued belief in crypto despite the FTX collapse, hinting at varying opinions within the industry.
In conclusion, the cryptocurrency market's challenges in 2022, as highlighted in the article, underscore the need for investors to approach the space with caution, considering the volatile nature and potential risks associated with crypto investments.
