The crypto crash has forced a rethinking of the digital gold rush

<p>While steep cryptocurrency price drops have caused many retail investors to pause, institutions and wealthy individuals are charging headlong into this brave new world.</p> <p>It's hardly a scientific theorem, but market observers could be forgiven for noticing a strange relationship between the holiday season and cryptocurrencies.</p> <p>Bitcoin, the world's largest digital currency by market capitalisation, arguably began its return to mainstream Australian news headlines and investment portfolios only a year ago.</p> <p>"Bitcoin is back," declared a feature article in The Australian Financial Review's Christmas bumper edition in December 2020, arguing that the much-maligned token was increasingly being viewed as an appealing asset to hold for the long term by some.</p> <p>The most visible cryptocurrency then more than doubled in value last year, reaching an all-time high of $US68,000 in November after beginning the year at around $US30,000.</p> <p>However, it has been on a steady decline since then, down 19.6 percent year to date and 36.7 percent since those heady November highs. More broadly, the global market for crypto assets has dropped from nearly $US3 trillion in November to around $US2 trillion now.</p> <p>The prospect of rising interest rates may have contributed to the Christmas crash. This is because market experts believe that in a low-interest-rate environment, the low or non-existent returns on savings and cash accounts were a partial motivator of demand for this gleaming but volatile new asset class, particularly among retail investors.</p> <p>Investors' concerns have been exacerbated by regulators' repeated warnings. The Australian Securities and Investments Commission warned self-managed superannuation fund investors this week that they are increasingly being targeted by cryptocurrency-related scams. "Superannuation is an appealing target for scammers," according to ASIC. "Cryptoassets are a speculative and high-risk investment."</p> <p>"My personal warning to people is to be careful