What Happened to Cryptocurrencies?

(6/15/22) Cryptocurrencies were supposed to be the ultimate alternatives to Gold and the Dollar, but that hasn't worked out so well: Back in 2015 there was a big move towards crypto's as the new "digital gold," with the ability to combat inflation--which seemed to work well, so long as a continuous stream of liquidity into the markets was unabated. Bitcoin soared to the $70,000 range, but since has fallen dramatically to $20k as the premise of crypto becoming the replacement for Gold as a hedge against inflation has fallen apart, and the speculative nature of crypto has evaporated as losses mount. As in any speculative asset, when losses reach a certain, critical point, margin calls and negative sentiment are triggered, and liquidation events occur. We will not be surprised to see a significant reduction in margin debt in the next report from FINRA. Ethereum has similarly lost a tremendous amount of value, down 60% for the year. Have these assets lost all of their value? Not necessarily; but speculative investment assets will always exhibit spectacular booms and busts. The question remains--when will these find their bottom, and when will a more opportune time to invest in them become apparent? We are now seeing significant deviations from long-term moving averages, suggesting a decent tradable rally--but we'd recommend using that rally to liquidate weaker positions, reduce risk, and raise cash ahead of a better opportunity for a longer-term, positive trend in which to invest.
Hosted by RIA Advisors' Chief Investment Strategist, Lance Roberts, CIO
Produced by Brent Clanton
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