Polite company never talks politics or religion. This Thanksgiving, it might be wise to avoid crypto, too.
Last year’s digital asset investors basted themselves in bitcoin riches.
Then, the token traded just below the almost $69,000 all-time high set weeks earlier.
By dessert time, the crypto hopefuls may have even sold the Baby Boomers on a token or two.
This holiday season, the bitcoin bulls have less to be grateful for.
The largest digital asset has plummeted about 70% since last Turkey Day.
That drop might annoy the guests who bought in, including the Baby Boomers persuaded by their younger relatives.
“I can also see older folks saying ‘I told you so,’” said Todd Sohn, a 36-year-old managing director of technical strategy at Strategas Securities in New York.
During the pandemic, central banks flooded markets with liquidity.
Flushed with added cash and plenty of free time, many Americans became enamored with cryptocurrencies.
Younger Americans proved especially eager to invest in the non-traditional asset, even as mom and dad likely remained wary of the newfangled blockchain.
Last holiday season, bullish investors likely sold their relatives on ‘Digital Gold’ and what they saw as a hedge against inflation. Niche tokens proliferated as prices rose ever higher – until they didn’t in the new year.
Unfortunately, Thanksgiving turkey had long gone cold by the time the crypto bubble truly burst.
Now, people are going home for the holidays in a very different market.
An array of scandal cooked up this year’s entrée of low token prices. What’s in it?
Three ounces of meltdown from crypto lender Celsius Network Ltd., a dash of collapse in the Terra ecosystem, and – the secret ingredient – the fall of Sam Bankman-Fried’s FTX empire.
Those disruptions have made way for some unpleasant dishes at the table. bitcoin is down about 20% this month while Ether – the second largest token – has plunged close to 30%.
The holiday season has also battered less popular tokens, from Solana to Dogecoin.
Think of them as the green bean casserole and dressing – often on the table but not universally appealing.
Well, this year, they’re burnt, perhaps inedible. The Bloomberg Galaxy Crypto Index measuring the largest cryptocurrencies, is down about 25% since the start of the month.
Even if crypto prices begin to recover, it might be wise to at least shy away from the subject of Bankman-Fried, the former crypto industry darling now shrouded in notoriety.
FTX owes its 50 biggest unsecured creditors a total of $3.1 billion, and everyday traders are at risk of never retaining funds locked on the crypto exchange.
It’s possible a dinner guest lost money, but even if nobody had funds on the platform, the subject still has its risks.
Mentions of FTX might evoke a diatribe from grandpa about the scandals of yore, be it Enron or Lehman brothers. Older relatives, said Sohn, might be quick to point out that “history rhymes.”
But Bankman-Fried, Caroline Ellison, and company might show up for dinner no matter how hard guests try to keep them out.
It’s “unavoidable,” wrote Nathan Batchelor, lead bitcoin analyst for SIMETRI Research. “We are still only in the first innings.”
More than 130 entities tied to FTX.com, FTX US and trading firm Alameda Research Ltd. were listed in Chapter 11 bankruptcy filings this month.
The fallout has dominated headlines in the weeks since as investors nervously watch other players in the digital asset space.
For families that have chatted crypto over the bull and bear cycles of the last few years, there could still be less at stake this Thanksgiving.
Younger cousins who told relatives to buy bitcoin in 2018 might have quadrupled grandpa’s investment by now, despite this year’s downturn.
The dinner guests who first peddled crypto in 2021, however, might be in trouble.
“If someone got their family in last year,” explains Quantum Economics Chief Executive Officer Mati Greenspan. “Everybody’s going to be pretty upset with that person.”
Sound like you? Maybe start prepping some Humble Pie.