The cryptocurrency market has experienced extreme volatility, shifting from a perceived wealth-generation machine to a precipitous crash that wiped out billions in value. While high-profile investors and celebrities have been swept up in the turbulence, countless everyday investors—particularly those from younger generations—also dove into the world of digital assets, often driven by curiosity and dreams of financial freedom.
One such investor is Lin Jian (a pseudonym), who began exploring cryptocurrencies as a student nearly a decade ago. With a background in finance, he witnessed the entire lifecycle of crypto in China—from obscurity to mania—and recently shared his reflections on a tumultuous ten-year journey.
Early Encounters with Bitcoin
Lin first encountered Bitcoin in 2012. “It was an innovative product growing rapidly,” he recalls. “I researched it and found its primary use was in black-market transactions.”
Bitcoin, launched in 2009, is a decentralized digital currency that operates without central authority. It relies on cryptographic principles and peer-to-peer technology to enable low-cost, pseudo-anonymous transactions.
“Because of its association with illegal activities, I decided not to invest at the time and didn’t research further,” Lin explains. Back then, crypto was virtually unknown in China. Data from Google Trends showed Russia and the U.S. leading in Bitcoin searches, while China barely registered.
The 2013 Boom
By 2013, however, cryptocurrency exploded onto China’s financial scene. BTC China, a domestic exchange, saw its monthly trading volume surge from 20,000 to over 90,000 Bitcoins, becoming the world’s largest exchange virtually overnight. China itself emerged as the top market for Bitcoin trading.
“For the next three years, Bitcoin’s price fluctuated within a range of a few hundred dollars,” Lin notes. “Regulators worldwide began taking notice and issuing risk warnings.”
Volatility and Fortunes
2017 was a landmark year. Bitcoin’s price soared from around $1,000 to nearly $20,000—a 20x gain. That September, Chinese authorities banned domestic crypto exchanges. Coincidentally, Lin transitioned from sell-side finance to a corporate investment role, where he evaluated blockchain projects.
“After thorough research, I found the space compelling and allocated a portion of my capital as a high-risk investment.”
The euphoria didn’t last. By 2018, Bitcoin’s price collapsed. “At its lowest, my portfolio was down by two-thirds. I considered it a failed investment and largely ignored it,” Lin admits. He held onto his assets, however, citing a “belief in blockchain and distributed ledger technology.”
The 2020 Rebound and Memecoin Mania
By late 2020, institutional adoption fueled a new bull run. “Major U.S. investment firms began entering the space, lending credibility and changing the investment thesis,” Lin observes.
Data from Coinbase shows institutional trading volume surged to $1.14 trillion in 2021—more than double retail volume. Lin sold some of his recovered holdings and reinvested in Dogecoin and other altcoins.
Dogecoin, propelled by Elon Musk’s endorsements, skyrocketed—from $0.005 to $0.73 at its peak, a 146x gain. Celebrities and athletes joined the frenzy, portraying crypto as an inclusive, cutting-edge alternative to traditional finance.
“The insane returns of 2021 were thrilling,” Lin says. He attributes the boom to expansive Federal Reserve policies and emerging blockchain applications like DeFi, NFTs, and the metaverse. “The wealth effect attracted newcomers, driving prices even higher.”
The Bubble Bursts
As retail investors flooded in, many professionals began exiting. “By Q4 2021, market sentiment cooled. Valuations had decoupled from real-world utility,” Lin states.
Prominent investors like Warren Buffett and Charlie Munger criticized crypto as unproductive and speculative. Hedge fund manager Bill Ackman likened certain stablecoins to Ponzi schemes.
The collapse of Terra’s LUNA and UST tokens in May 2022 triggered a market-wide crash. LUNA plummeted from nearly $100 to $0.0001, erasing $40 billion in value. Nearly 400,000 traders were liquidated, including one $10 million position.
Binance CEO Changpeng Zhao joked that he’d been “reduced to poverty” overnight. Lin believes the LUNA crash exacerbated systemic vulnerabilities. “If the Fed continues raising rates, reduced liquidity could further pressure crypto markets.”
For a sustained recovery, Lin argues, crypto projects must develop real-world use cases, attract users, and generate revenue. “But that will take time to validate.”
Frequently Asked Questions
What caused the 2022 cryptocurrency crash?
The collapse was triggered by the failure of algorithmic stablecoins like TerraUSD (UST), coupled with macroeconomic factors such as interest rate hikes and reduced market liquidity. These events exposed the fragility of highly leveraged and speculative assets.
Is cryptocurrency a good long-term investment?
Cryptocurrency remains highly volatile and speculative. While blockchain technology holds promise, investors should only allocate capital they can afford to lose and prioritize projects with clear utility and adoption.
How can investors manage risk in crypto?
Diversification, thorough research, and avoiding excessive leverage are essential. 👉 Explore more strategies for risk management and stay informed about regulatory developments.
What role do institutional investors play in crypto markets?
Institutions influence liquidity, price discovery, and market sentiment. Their participation can lend credibility but also introduce correlated risks seen in traditional markets.
Will cryptocurrency markets recover?
Recovery depends on broader macroeconomic conditions, regulatory clarity, and genuine technological progress. Markets may remain volatile until tangible utility is demonstrated at scale.
What are the biggest misconceptions about cryptocurrency?
Common myths include that all cryptocurrencies are anonymous (most are pseudonymous), that they are inherently worthless (value derives from scarcity and utility), and that they are entirely unregulated (compliance requirements are evolving rapidly).
The content provided is for informational purposes only and does not constitute investment advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.