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\n \n The spectacular implosion of cryptocurrency exchange FTX<\/a>, a so-called unicorn startup that was recently valued at $32 billion, is just the latest bit of bad news for investors in bitcoin, ethereum and other digital assets. But 2022 was already an awful year for crypto before the FTX-Binance<\/a> soap opera.\n <\/p>\n \n Bitcoin prices<\/a> are currently hovering around $16,500, down from a level of $20,000 just a week ago. Still, even at $20,000, that was a far cry from the price of just north of $46,000 that bitcoin was trading at on the last day of 2021.\n <\/p>\n \n It turns out that investors who were hoping that rising interest rates and higher levels of inflation would be good for so-called alternative assets like cryptos and gold have been in for a rude awakening this year.\n <\/p>\n \n They\u2019ve gotten hit just like stocks and bonds, proving there really is no place to hide in a market where worries about rate hikes and recession reign supreme.\n <\/p>\n \n Gold prices have fallen about 6% this year, and the price of the yellow metal is not far from the lows it hit at the beginning of the Covid-19 pandemic in early 2020. Gold, like bitcoin, then surged in the latter part of 2020 as a sort of safe haven trade.\n <\/p>\n \n So can gold and crypto bounce back? The strength of the US dollar has hurt both precious metals and cryptos. Why buy gold or digital assets when the greenback is proving to be the king of currencies?\n <\/p>\n \n Some experts are hopeful that the worst could soon be over for bitcoin and other cryptocurrencies.\n <\/p>\n \n This isn\u2019t the first time that there has been a so-called crypto winter. Bitcoin prices have been notoriously volatile over the past few years, but they have still done better than many major stock market indexes.\n <\/p>\n \n Just look at bitcoin prices since the summer of 2020. They\u2019re up more than 80%\u2026even though it has been far from a smooth ride. The Nasdaq, by way of comparison, is only up about 1% from July 2020 levels.\n <\/p>\n \n \u201cBitcoin and ethereum went straight up and down but they have still gained a lot from mid-2020. Over that longer time horizon, digital assets are still outperforming tech stocks,\u201d said Jeff Dorman, chief investment officer at Arca, a firm that specializes in crypto.\n <\/p>\n \n The crypto crash has also led to a massive plunge in the shares of publicly traded companies with ties to bitcoin, such as Coinbase<\/a>, crypto mining firms Hive \n Some analysts think that it\u2019s a mistake though to punish the entire crypto industry because of the problems at FTX.<\/a> The near-collapse of FTX<\/a>, one of the largest cryptocurrency exchanges, has prompted questions of contagion.\n <\/p>\n \n \u201cWhile we acknowledge that the FTX saga could weigh on the crypto space in the near term, we also believe the sell-off in [Silvergate] shares\u2026reflected significant misunderstanding of the mechanics of the company\u2019s platform,\u201d said Mark Palmer, head of digital asset research at BTIG, in a report.\n <\/p>\n \n One venture capitalist who focuses on bitcoin and crypto assets agreed that FTX\u2019s problems won\u2019t derail the entire digital assets universe.\n <\/p>\n \n \u201cInvestors don\u2019t appear to be concerned about the impact of FTX on bitcoin\u2019s future,\u201d said Alyse Killeen, founder and managing partner of venture firm Stillmark. To that end, her company recently invested in bitcoin infrastructure firm Hoseki, a company that is also backed by the parent company of Fidelity.\n <\/p>\n \n Killeen added that the drop in bitcoin prices that was occurring even before the FTX meltdown is a sign that cryptocurrencies are not yet a true hedge against inflation and a stronger dollar.\n <\/p>\n \n That may eventually change once bitcoin matures. But for now, crypto adoption is still in its nascent stages. So dollar strength is still a negative for bitcoin.\n <\/p>\n \n \u201cBitcoin is still young. It is still a new form of currency, payment and store of value,\u201d she said.\n <\/p>\n \n The strength of the mighty dollar has been a headwind for gold, too, and it\u2019s not yet clear if the greenback is going to weaken substantially anytime soon\u2026even though October inflation figures showed a smaller than expected jump in consumer prices. That could lead the Fed to start slowing its pace of rate hikes.\n <\/p>\n \n \u201cIn this current environment, monetary policy remains the dominant force,\u201d said Joe Cavatoni, chief market strategist for North America with the World Gold Council. \u201cI\u2019ll be looking out to see what happens to investment demand and the gold price once inflation settles at a steady rate.\u201d\n <\/p>\n \n Cavatoni said that gold weakness this year is due primarily to a \u201cmore tactical response to persistent Fed rate hikes and the surging US dollar\u201d from big institutional investors.\n <\/p>\n \n The dollar may have more room to run. That could be more bad news for gold.\n <\/p>\n \n \u201cCash has still been king,\u201d said Bob Doll, chief investment officer at Crossmark Global Investments. \u201cThe dollar eventually has to weaken and that could get gold going again, but it\u2019s hard to call tops and bottoms in currencies.\u201d\n <\/p>\n \n \u201cWe\u2019re not likely to get on board a dollar weakness. It\u2019s not time to try and be a hero with gold,\u201d he added.\n <\/p>\n<\/p><\/div>\n
\n New York<\/span>
\n CNN Business<\/span>
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\n (HVBTF)<\/a> and Riot
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\n (RIOT)<\/a> and bitcoin bank Silvergate
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\n (SI)<\/a>.\n <\/p>\n