**illion of Crypto Vanished in Just Six Months**
**The helium is coming out of bitcoin and other cryptocurrencies as investors shy away from risk**
**By Peter Santilli and Corrie Driebusch, The Wall Street Journal, May 13, 2022**
**Traders’ flight from risky investments has halved the price of bitcoin and other cryptocurrencies, wiping out more than $1 trillion worth of digital money since November.**
**Wild swings are fairly common with cryptocurrencies, but even seasoned investors were left reeling as bitcoin dropped 29% over a seven-day losing streak that just ended as a stablecoin—one part of the crypto world that touted its stability—unexpectedly crashed.**
**Investors are staring at an inflection point in the financial markets as interest rates rise and inflation rages, and they are responding by selling risky assets....** [end quote]
People have put real, actual USDs into buying cryptocurrencies. Since the US GDP is $24 Trillion, the vanished $1 Trillion is equivalent to evaporating 4% of GDP. Some of this was hard money (capital) and surely some was borrowed and will need to be repaid. But it was real money which vanished.
That isn’t counting the huge amounts lost in the stock market, especially the NAZ.
The Fed wanted to take air out of the balloon. They’ve only raised the fed funds rate to 0.75%, still a strongly negative real rate. They want to raise the rate to “neutral.”
Will the bubbles decline gently or will they burst suddenly?