Cryptocurrency prices have fallen sharply again. Friends of mine are asking the question that has been asked many times before: is this the end for crypto? I am no crypto expert, and it represents only a small portion of my overall wealth (driven mainly out of fear of missing out rather than a deep understanding of the whole crypto infrastructure and the value you can attribute to it), but it is a topical question that is worth considering.
So, is this the end or another big reset?
Within the investment management industry, we tend to look at history to try and get a guide for how things might pan out in the future (albeit we are quickly warned that past performance isn’t a guarantee of future performance).
Cryptocurrencies have experienced dramatic drawdowns in the past, far worse than many traditional investors are used to.
Some notable examples in GBP terms across different cryptocurrencies include:
Bitcoin:
- November 2011: -58.5%
- January 2015: -79%
- January 2019: -74%
- December 2022: -69%
- March 2025: -23%
- Currently: -34%
Ethereum:
- Mar 2018: -65%
- Jan 2019: -89%
- Jun 2022: -75%
- Apr 2025: -61%
- Currently: -43%
Ripple (XRP):
- June 2020: -90%
- June 2022: -81%
- Currently: -51%
Source: Backtest by Curvo
Across the above drawdowns, both Bitcoin and Ripple have bounced back to reach all-time highs and Ethereum recovered to just below 10% off its all-time high before the most recent sell-off. The pattern is clear: crypto as an asset class is extremely volatile, and anyone investing in it should do so with their eyes wide open and be prepared for the possibility of significant loss.
There are reasons to believe that this could be another painful, but normal crypto cycle. The networks are still functioning, and Bitcoin and Ethereum continue to process transactions without interruption. Additionally, institutional participation has increased, with better custody solutions and improved regulatory frameworks.
However, it is important not to ignore the other side, as it were. Crypto is still a very young asset class and whilst much improved, regulatory uncertainty remains and there is always the potential for governments to impose stricter rules. Unlike stocks, which represent ownership in companies producing earnings, many cryptocurrencies rely on adoption, utility and, most importantly, investor confidence. Cryptocurrency valuations are therefore often driven by speculation, with some projects having little real-world application.
Consider the non-fungible token (“NFT”) boom. A few years ago, returns from mainstream cryptocurrencies slowed, and so investors turned to speculative NFT trading, funded by crypto gains. I recall a friend, who had been an investor in cryptocurrencies since 2017, enthusiastically describing NFTs as the future. He bought one (featuring an ape) for £1,000. An hour later, it was worth 50% less. Within a couple of years, the market capitalisation of NFTs has fallen from $17.1 billion in April 2022 to $1.5 billion today. An NFT (of a robot samurai) that once traded for $1.8 million is now worth circa $2,852 as at the end of last year.
Just as NFTs never recovered, many cryptocurrencies have not returned to previous highs. Survivorship bias can make history look cleaner than the reality.
For me the most important question isn’t just “Where is the bottom?”. One also needs to consider:
- How much risk can you realistically tolerate?
- Are you investing money you can afford to leave untouched for years?
- Do you understand the volatility you’re signing up for?
Crypto’s past shows enormous upside, but also extreme downside.
As with any investment portfolio, you should therefore avoid overexposure, make sure you diversify beyond crypto and remain focused on the long term, rather than reacting (often emotionally) to short-term movements, because trying to perfectly time the market is near enough impossible.
So, going back to the original question around whether this is the end for crypto. The honest answer is that I don’t know. And nobody does really.
There is no clear evidence that the entire crypto ecosystem is collapsing. Major blockchains continue to operate. Development continues. Interest remains.
At the same time, this is clearly a bear market environment. Prices could fall further and recovery could take time, as it has before.
Crypto has crashed previously and recovered. It could do so again. Alternatively, it could evolve into something less hype-driven and more regulated than its most optimistic supporters expect.
If you choose to stay invested, do it with realistic expectations and with capital you can afford to risk.
We have been here before and we may well be here again. Volatility is part of crypto’s story. The question is whether you’re comfortable living with it.
