Things are getting cold. The price of the digital currency fell to a six-month low below $38,000 on Friday. Trading volumes have fallen.
Some investors are concerned that the market is going into a "crypto winter", a period when prices fall sharply and fail to recover for more than a year, as the Federal Reserve tightens monetary policy.
It could be worse. Paul Jackson, the global head of asset allocation research at Invesco, told Insider that there could be an "ice age" where prices stay low for a long time.
It's not just Fed policy. Many potential investors have doubts about the robustness of the technology, and regulation that could stifle industry development.
The Fed could put a freeze on it.
"Bond King" Jeff Gundlach said in early last year that he thought the Fed and the US government had boosted the value of the currency.
The Fed turned off its faucet less than a year ago. Markets are expecting four interest rate hikes.
Tech stocks and cryptocurrencies have been hit by the jump in bond yields. When returns on risk-free bonds are higher, the two speculative assets look less attractive.
According to Jackson, there is more pain to come as bond yields rise further.
He said that central banks and governments have played a role in jacking up the markets and that they will have a role in depressing them.
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Even bulls such as Mike Novogratz have said that the market is likely to stay under pressure.
Jackson thinks it could be an ice age. If you take away the conditions created by the Fed, it will change the outlook.
Questions about regulation and technology.
Many cryptocurrencies supporters disagree. Dan Morehead, CEO of investment firm Pantera, said in a note last week that the sector should stay strong because of the increased use of cryptocurrencies.
He pointed to the growth of DeFi, where financial activities such as trading can be carried out without the need for middleman.
Many investors are worried about regulation. The central bank of Russia proposed a ban on mining and transactions this week. Spain and the UK are cracking down on advertisements for virtual currency.
James Malcolm, head of foreign-exchange strategy at U.S. investment bank, told Insider that he thinks problems with the technology could be one of several factors that could drag the world into another winter.
The founder of the Signal messaging app wrote that the technology is clunky and far from decentralization. High transaction fees and congestion are proving very hard to fix for users of the ethereum network.
Malcolm said that a lot of people in the technology space were questioning whether or not the technology was effective. Why aren't a lot of big tech companies involved in next-generation technology? Why isn't the company invested more?