Bitcoin’s bounce doesn’t settle the biggest worries about crypto

Don’t forget to count up the wealth burned by collapsed exchanges, bankrupt lending programs and pump-and-dump altcoin trading 

But for the rest of us, who might feel a shade of the old fear of missing out, a discussion of survivor bias is in order. The prices of a few big coins such as Bitcoin and Ether don’t provide a full picture of what crypto traders have been through. Imagine an investor who got into crypto in 2021: Sam Bankman-Fried’s FTX exchange could have seemed a reasonable place to keep those coins. And besides Bitcoin, there were 12,000 smaller “altcoins” to dabble in, many of them now dead or illiquid, specters of a rampant pump-and-dump trading trend that made tokens look more valuable than they really were.

A crypto enthusiast might also have followed famous investors such as Mike Novogratz of Galaxy Digital Holdings Ltd. into the then-hot Luna token or bought its linked stablecoin, TerraUSD—both of which have since imploded, with founder Do Kwon facing charges of fraud. Meanwhile, several now-bankrupt lending platforms offered ways to earn fat yields on digital assets. And nonfungible tokens—digital assets linked largely to virtual cartoon pictures—briefly seemed cool enough to trade for thousands or even millions of dollars. They’re still trading, but at a relative pittance. In short, there were countless ways to vaporize wealth.

Even buying and holding Bitcoin—HODLing, crypto lingo for holding on to an investment no matter the cost—would have been hard over the past two years. Since February 2022, the coin’s price has gone from around $44,000 to about $48,000 today. But the journey in between has been fraught—it fell as low as $15,500 when FTX collapsed. Crypto investors have weathered much more volatility than you’d see in stocks or bonds, reaffirming the narrative that digital tokens aren’t for the faint of heart. “If I had to sum it up in one word, it would be ‘stressful,’ ” says Craig Erlam, a senior market analyst at foreign exchange brokerage Oanda Corp. “We’re back to basically where we started, but the ride in between has been quite eventful.”