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In less than a year, crypto has collapsed. The total value of digital currencies is now less than a third of what it was in November, when Bitcoin hit an all-time high. In the past couple years, many people bought crypto for the first time. And now, as NPR's David Gura reports, they are having to cope with painful losses.
DAVID GURA, BYLINE: When did crypto go mainstream? You could argue it was in October of last year. Back then, companies were spending tens of millions of dollars on marketing. They bought naming rights to sports arenas. And then there were the ads fronted by celebrities, including Matt Damon.
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MATT DAMON: History is filled with almosts, with those who almost ventured, who almost achieved. But ultimately, for them it proved to be too much.
GURA: That commercial for crypto.com is all about FOMO. At the end of it, Damon turns to the camera and says...
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DAMON: Fortune favors the brave.
GURA: Michelle Makovski (ph) downloaded the Robinhood app early in the pandemic, and she bought $500 worth of cryptocurrency a few months before that ad debuted. She's a manager at a large insurance company who lives outside Seattle. And like millions of people, Makovski got swept up in the moment. Her son's daycare had closed, so she had some extra cash. The price of Bitcoin kept climbing. Crypto was in the headlines. And in 2021 it seemed like everyone, including Academy Award-winning actors, was talking about it.
MICHELLE MAKOVSKI: You know, that gives it some sort of approval that not just scammers are using it. Then I felt safe to try it out, to put my money in there.
GURA: Makovski bought thousands of dollars worth of Bitcoin as it approached its all-time high in November. She remembers thinking, better late than never.
MAKOVSKI: So I definitely bought at the top.
GURA: Well, today Bitcoin is trading at less than a third of that, dragged down by the same forces that stopped the stock market's record-setting run - the Federal Reserve's decision to hike interest rates to fight high inflation. Makovski says she got into it to make a buck, and eventually she branched out from Bitcoin to other digital currencies.
MAKOVSKI: I bought a ton of the top 100 coins. Just - I went down, and I'd put, like, $10 in every coin, just kind of feeling like I was spreading my - hedging my bet.
GURA: Makovski says she watched YouTube videos about crypto while she was working out, and by the end of 2021, she'd spent about $30,000 on digital currencies.
MAKOVSKI: And I think when I said that number out loud to my family, I was a little shocked. I remember thinking, wow. You know, that is a significant amount of money.
GURA: Makovski says she was careful not to risk more than she could afford to lose. And Ramiro Flores, another first-time investor, told me his approach was the same. He lives in Edinburg, Texas. Flores worked for the local fire department, and now he does home health care for the elderly. Flores has owned Bitcoin since 2018.
RAMIRO FLORES: So to me, like, I like gambling. I go to Vegas quite a lot. It's always like, hey; you know, like, this is just like a little trip to the casino.
GURA: The crypto downturn has been heartbreaking, he says. But as Flores has continued buying crypto, he's come to see it as more than a bet. Yes, he's trying to make money. But Flores also hopes it will lead to big changes to the banking system and the global economy. Flores says he's in it for the long run. He's 31 years old.
FLORES: Right now I'm down some money, but I'm like, hey; if I don't sell, I don't lose out. I don't lose that money technically. So I'm just going to keep on riding this little rollercoaster that we're on.
GURA: A few months ago, Michelle Makovski got off. She was worried crypto companies would run into trouble or go bankrupt, and several have. And the value of her crypto kept dropping.
MAKOVSKI: It's like there's definitely peace that comes with just selling off such a volatile asset and that I don't have to worry, am I losing $500, a thousand dollars today?
GURA: By May, she'd cashed out completely. She decided to cut her losses, which Makovski estimates were around $8,000. David Gura, NPR News, New York.
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