What 2022 may have in store for the cryptocurrency investor

The first week of 2022 has not been kind to Bitcoin, as the cryptocurrency lost 11% of its value in just a few days and ended this week at around $ 42,000, almost 40% less than its all-time high last fall.

Analysts keeping a close eye on cryptocurrencies said the Federal Reserve’s hint to raise interest rates earlier than expected caused many investors to sell their bitcoin holdings and move toward safer investments. Other digital currencies, including ethereum and ripple, also tumbled this week, down 13.5% and 9%, respectively.

That’s part of the course in the ultra-volatile crypto market, with investors expecting the big swings to continue in 2022.

“It’s part of the game,” Ryan Firth, a financial planner at Mercer Street Financial, told CBS MoneyWatch. “You have to hold on tight and go in with your eyes wide open. You could see an 80% decrease in a few months.”


Millions of dollars in Bitcoin buried

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For investors, 2021 marked an action-packed year for cryptocurrencies. Bitcoin saw its price hit a high of $ 69,000 in November, while ethereum posted a record high of $ 4,404 in October.

In a sign of the growing importance of cryptocurrencies, a number of important retailers started accepting the currency as payments. Some sportsmen and politicians started receiving part of his salary in cryptocurrencies, while Wall Street created tradable funds around cryptocurrency futures.

As the price of bitcoin, ethereum, and others soared, crypto companies made flashy moves. Coinbase went public on the Nasdaq last April and Crypto.com ran a commercial with Hollywood star Matt Damon.

In perhaps the largest move to date, the crypto world culminated in 2021 with Crypto.com buying the naming rights to the Staples Center in Los Angeles and renaming the Crypto.com Arena sports arena in a $ 700 deal. millions.

“We will see even more publicly traded crypto companies in 2022 than we saw in 2021 and several of them will have valuations of more than $ 5 billion,” predicted blockchain analytics firm Arcane Research in a research note.

Arcane also appears to have more crypto ETFs on the horizon, offering investors a way to test the waters while limiting downsides.

Do not look down

Still, investing in digital currency “is not for the faint of heart,” warned Firth, who personally invests in crypto while advising clients not to put more than 5% of their portfolio in such a volatile asset. Some days, an investor will see tremendous gains, but “they still have to prepare for that sudden drop of more than 50% in a week or so,” he said.

Andrea Hardison, a project manager at a technology consulting firm in Nashville, said she expects big price swings in cryptocurrencies in 2022, just like last year. But Hardison, who started buying cryptocurrencies last April, still plans to continue investing more money in hex, bitcoin, solana and ethereum, noting that some of his bets they have already doubled in value.

Robert White III, a workforce development social worker in St. Louis, is also unfazed by the rollercoaster of the crypto market. Bitcoin owner White said he plans to withdraw a portion of his paychecks directly to buy cryptocurrencies.

“My approach will be consistent and stable,” said White, who bought his first bitcoin in 2017 when it sold for $ 1,100. “I expect growth three times higher than what I have invested, but cryptocurrencies are so volatile that they can work in many different ways in one day.”

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