Galaxy Research reported in November that crypto-collateralized lending reached a record $73.6 billion. (Photo subject is a model.) – Getty Images/iStockphoto
“Hodl” space for this group of investors.
The speculation that bitcoin would hit $200,000 in 2025 now seems like a dream. Mostly, because it was. There are volatile assets — penny stocks, leveraged ETFs, emerging-market funds — and then there is crypto. If you thought crypto was a hedge against economic troubles, geopolitical tensions, potential tech bubbles, inflation, high interest rates, a housing market that has barely given an inch and growing worries about the labor market, think again. People forget about past follies, either by choice and/or because they’re distracted by the next shiny thing.
As bitcoin prices head south, investors may hold their breath and wonder whether it was wise to go where Nobel-winning economists feared to tread. Or they will shrug and say, “Time is on my side.” After all, it’s not always wise to invest in a largely untested, decentralized asset without nerves of steel. And if you borrowed money against bitcoin? That’s a horse of a different color. We never learn: Roughly 600,000 margin accounts were held by brokerage firms prior to the 1929 stock-market crash. These loans helped to exacerbate the effects of the economic downturn.
And now bitcoin BTCUSD, the cryptocurrency that Nobel Prize-winning economist Paul Krugman has repeatedly decried as a Ponzi scheme — strong words for a trillion-dollar asset — is being battered (once again). Hovering around $70,000 on Saturday, the bloodletting likely isn’t over yet. It peaked at more than $126,000 last October, but those heady days are long gone. Bitcoin began life as an alternative currency, one with immense volatility, and crypto aficionados are telling their followers to hold (or “hodl”). Scores of people have even borrowed against it.
Related: Gold is back above $5,000, but is it a high-risk bet?
Coinbase COIN offers crypto-backed loans, as part of a service launched last year, that allow customers to borrow…
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