The Crypto Gamble: How Your 2022 Tax Refund Could Have Tripled in Three Years

The average U.S. tax refund in 2022 was $4,381, a figure many Americans treated as a windfall. But what if, instead of spending it on vacations or debt repayment, you’d invested the entire amount in Bitcoin on May 9, 2022—the day the cryptocurrency plunged to $28,900 amid the collapse of the Terra Network? By May 9, 2025, that decision would have turned your refund into roughly $9,063, a 106.9% return. Here’s how, why, and what it means for investors weighing crypto’s risks and rewards.

The Starting Line: A Tax Refund Turned Crypto Bet

In 2022, the average refund was $4,381—$636 higher than in 2021, reflecting a post-pandemic economic rebound. For context, the median refund in the lowest income bracket (under $10k) was just $1,050, while those earning over $1 million averaged $246,696. But for most Americans, the refund was modest.

On May 9, 2022, Bitcoin traded at $28,900, down sharply from its 2022 peak of $47,315 earlier that March. The collapse of Terra’s UST stablecoin had triggered panic selling, underscoring crypto’s systemic risks and regulatory vulnerabilities. For an investor, this low point offered an entry point—though few could have predicted the subsequent rebound.

Three Years of Volatility: From Terra’s Collapse to Institutional Momentum

Over the next three years, Bitcoin navigated a turbulent landscape:
- 2022: Continued selling after Terra, with prices bottoming near $17,600 by December.
- 2023: A rebound fueled by Bitcoin ETF approvals, China’s crypto crackdown easing, and institutional capital flowing into “blue-chip” cryptos.
- 2024–2025: Regulatory clarity in the U.S. and Europe, coupled with corporate adoption (e.g., Tesla’s re-entry into Bitcoin purchases), drove prices higher.

By May 9, 2025, Bitcoin had rallied to $62,500, a 116.6% gain from its 2022 low. The rise wasn’t linear—volatility persisted, with dips in 2023 and 2024—but the long-term trend rewarded holders.

The $62,500 price on May 9, 2025, reflected a confluence of factors: robust trading volumes, $200 million in Bitcoin ETF inflows, and a “risk-on” environment mirrored in equities like MicroStrategy (up 3.8% pre-market on May 9).

The Math: A Tax Refund’s Triple

Investing $4,381 in Bitcoin at $28,900 in 2022 would have bought 0.1516 BTC. By 2025, that stake would be worth 0.1516 × $62,500 = $9,475—a profit of $5,094, or 116.3% growth. Compare this to:
- The S&P 500, which rose 12% over the same period.
- A 10-year Treasury bond, yielding roughly 4% annually.

Crypto’s returns outpaced traditional assets by a landslide—but with far greater risk.

The Risks: Why Crypto Isn’t a Sure Thing

While the numbers look enticing, the journey was perilous:
- Volatility: Bitcoin’s price swung between $17k and $62k during this period. A panic sell in 2023 or 2024 could have erased gains.
- Regulation: The SEC’s scrutiny of crypto exchanges and stablecoins introduced uncertainty.
- Systemic Shocks: The Terra collapse wasn’t an isolated event; similar crises in DeFi or NFT markets could have triggered further declines.

Even in 2025, Bitcoin’s RSI of 72 (overbought territory) signaled overexuberance, while macro risks like Fed rate hikes loomed.

The Bottom Line: A High-Reward, High-Risk Gamble

Investing your tax refund in crypto over three years would have tripled your money—but only if you could stomach the rollercoaster. For most investors, crypto should remain a small, speculative portion of a diversified portfolio.

The data is clear: $4,381 in 2022 Bitcoin became $9,475 by 2025, outperforming stocks and bonds. Yet, this success hinges on timing, luck, and a tolerance for extreme volatility. As the old Wall Street adage goes, “Don’t mistake a bull market for brains.” Crypto’s future may hold more booms—or busts—but for those who rode this wave, the rewards were undeniable.

In the end, the lesson isn’t about Bitcoin’s potential, but about risk. As the IRS processes another year of tax refunds, remember: turning cash into crypto is a gamble—one best placed in the extreme corner of your financial strategy.