Bitcoin has taken a bit of a beating recently. Since reaching an all-time high in early October, the OG cryptocurrency has lost about a quarter of it’s value and the overall crypto market is down about a trillion dollars.
Until recently, 2025 was a banner year for crypto entering the economic mainstream. Crypto exchange Coinbase joined the S&P 500, Congress passed a law allowing major banks to play with stablecoins, and even crypto holdout JP Morgan announced it would allow clients to use Bitcoin as collateral for loans.
All of those connections between the real economy and the blockchain were happening mostly when crypto was on the upswing. So what happens now?
Longtime crypto investors, like Leigh Drogan at Starkiller Capital, are used to watching crypto prices fall off a cliff. But he said this most recent nosedive was different, because crypto had reached the top of the cliff just a second ago.
“It’s the ferocity of the reversion from a good momentum, new high, straight into basically a crash,” he said.
Bitcoin true believers will tell you the cryptocurrency will ultimately become digital gold — a safe store of value against inflation and rising national debt.
Well, we still have sticky inflation and a rising national debt, but right now investors are viewing Bitcoin less like gold and more like a risky tech stock.
“There are just a lot of different things coming together at the same time that are causing investors to be scared of risk assets in general, and crypto is the risk asset of all risk assets,” Drogen said.
For you non-crypto folks out there, I know what you’re thinking: What do I care if a bunch of crypto bros lose their Lamborghini savings fund?
Well if your 401(k) is invested in an index fund that tracks the general stock market, you probably own some stock in crypto companies.
”If there’s a downturn in those parts of the markets, the equity markets, the crypto markets, there would be some knock-on effects on spending,” said Todd Baker, a lecturer at Columbia Law School.
And that could hurt the real economy.
Baker said he also worries about new rules from President Donald Trump allowing more banks and other financial actors to loan money for crypto investing.
“The question is contagion, and that that involves who’s providing leverage to whom in the overall system, and I think there’s very little transparency to that when it comes to crypto,” he said.
Even though prices might be down now, crypto enthusiasts say there will be more opportunities for everyday investors to get in on the action.
“I think it’s gonna be a crypto-ETF-palooza over the next year,” said Matt Hougan at Bitwise Asset Management. “The doors are open.”
ETF is short for exchange traded fund — basically an easy way for investors not fluent in the blockchain to put their money in crypto.
