Crypto Hits a Rough Patch

🔢 By the numbers… The world’s most valuable cryptocurrency briefly fell below $40,000 on Monday as it, ether, and other altcoins struggle through what’s known as a ‘bear market.’ That’s when prices fall 20% or more from recent highs over a sustained period of time, often at least two months.

• Since November, when bitcoin reached its all-time high of nearly $69,000, the entire crypto market has lost roughly one-third of its combined market cap, which currently stands at ~$2 trillion.

🌍 Around the world: When China, the previous world leader in crypto mining, banned the industry outright last year, that didn’t stop folks from mining – instead, many moved to other energy-rich countries to stay in business. But over the past few months, Iran and Kosovo implemented crypto mining bans, citing soaring energy prices and blackouts.

📈 The big picture: While recent crypto news may seem all doom-and-gloom, we try to keep things in perspective. The sector’s market cap nearly tripled last year – ether notched a 408% gain, and bitcoin outperformed both gold and the S&P 500 for the third straight year (+70%).

Growing institutional adoption was also a bright spot in 2021.

• VC funding for crypto asset firms rose 720% to $25.1 billion, according to data from The Block Research, while mainstream companies like Tesla and Block purchased millions – or billions – worth of crypto as a long-term investment.

👁️ Looking ahead… Lawmakers in DC are still trying to figure out how to establish rules and guidelines to make crypto safer for investors and less appealing to cybercriminals. Scammers took home a record $14 billion in crypto in 2021.

• SEC Chair Gary Gensler recently said “a lot of people are likely to get hurt” if stricter regulation isn’t introduced to protect against fraud and manipulation.

+For crypto investors: The $1.2 trillion infrastructure bill signed into law last November includes tax reporting provisions that make it easier for the IRS to track crypto activity among Americans – here's what you need to know.