Cryptocurrency entered the economic mainstream last year as Coinbase joined the S&P 500, Congress passed a law enabling banks to engage with stablecoins, and JPMorgan Chase allowed clients to use Bitcoin as collateral for loans. Bitcoin has pulled back from its October peak, down about a quarter, and the total crypto market is off by roughly a trillion dollars. Those connections between the real economy and crypto were strongest during the upswing, and now investors are assessing what happens next.
Longtime investors such as Leigh Drogan of Starkiller Capital described the move as ‘the ferocity of the reversion from a good momentum, new high, straight into basically a crash.’ While some bitcoin believers still argue it could become a digital store of value, most investors currently treat it as a high-risk tech asset. The macro environment—sticky inflation and rising debt—continues to shape crypto’s fortunes and its appeal as a risk asset rather than a safe haven.
Even with the pullback, advocates expect broader access through exchange-traded funds, a trend that could bring crypto to more mainstream investors. ‘I think it’s gonna be a crypto-ETF-palooza over the next year,’ said Matt Hougan of Bitwise Asset Management, adding that ETFs make crypto accessible to those not fluent in blockchain. Todd Baker, a Columbia Law School lecturer, warned of contagion risks and the lack of transparency around leverage within crypto markets.
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