Crypto investors panicked on Thursday as the value of cryptocurrencies, including bitcoin, plunged, with some saying they would lose their homes as a result.
Crypto investors panicked on Thursday as bitcoin fell to its lowest price in more than a year and other cryptocurrencies suffered even worse selling.
The victims of the bloodbath — which comes amid a broader stock market rout — range from billionaire crypto titans who run major exchanges such as Coinbase and Binance to lowly retail investors who have invested their life savings in cryptocurrencies. currencies, the New York Post reported.
“I’ve lost over $450,000, can’t pay the bank,” reads one of the top posts on the Reddit forum for Terra Luna, a cryptocurrency that has lost over 99% of its value in the past. course last week.
“I will soon lose my house. I will become homeless.
“My ex-colleague attempted suicide,” read another forum post. “He basically moved all of his savings into crypto in 2021 and LUNA was a massive player in his portfolio.”
Another user wrote: “Sounds unreal can’t believe this is happening I basically lost 60k overnight with what could have been considered an asset at risk for 3 days and can’t I can’t sell, I can’t buy, I can just watch it burn. This is insane. What the real f**k is.
While Luna’s collapse is the most dramatic, other cryptocurrencies are also in freefall.
Bitcoin was trading around US$28,300 (AU$41,200) on Thursday afternoon, down 20% from last week and nearly 60% below its all-time high of US$69,000. (AU$100,000) in November. 2021. Other major cryptocurrencies, including Ethereum and Solana, are now worth fractions of their all-time highs.
The entire cryptocurrency market now has a market capitalization of $1.2 trillion, less than half of the $2.9 trillion it was worth in November, according to data from CoinMarketCap.
“There are a lot of people out there who got real bruises.” said Garrick Hileman, head of research at Blockchain.com. “In crypto, the strong survive and the weak are flushed.”
The ongoing rout is fueling critics who have long argued that decentralized digital currencies were a frothy fad fueled by low interest rates and pandemic-era stimulus checks.
Leading crypto critics include JPMorgan Chase boss Jamie Dimon, who once called bitcoin “worthless” – as well as billionaire Berkshire Hathaway executives Warren Buffett and Charlie Munger.
Munger, 98, recently called cryptocurrencies a “venereal disease” that he was “proud” to have avoided. Berkshire Hathaway shares are up 5.6% in the past six months, while bitcoin is down 56%.
The crypto crash comes as the Federal Reserve hikes interest rates in a bid to calm inflation, sending high-risk tech stocks into a tailspin. The tech-heavy Nasdaq Composite Index has fallen 30% so far this year and has been highly correlated to the price of bitcoin in recent weeks, according to data from Refinitiv.
“We’re seeing more ownership overlaps than ever before, this kind of convergence between Wall Street and crypto,” said Hileman, who is also a visiting scholar at the London School of Economics.
Investors who have invested their money in hot tech stocks have been beaten alongside crypto fanatics.
“Help needed: ALL LOST in the stock market,” read a popular post on the Blind corporate bulletin board. “I’ve invested every last dollar I’ve saved in the stock market and I’m down nearly 85% right now. »
The 29-year-old self-identified Home Depot employee said he mainly owns shares in tech companies such as Meta, Peloton and Spotify.
“They all put the bed down,” said the enraged employee. “Same with crypto.”
Bitcoin’s fall is likely to scare off some of the retail investors who poured money into the crypto during its stimulus-fueled surge, while potentially attracting those hoping to buy the dip, according to Bitcoin IRA’s Chris Kline .
“It takes tourists away from true believers,” said Kline, who is the COO and co-founder of the retirement crypto investment site with 100,000 users. “There will be people who say, you know what, crypto is just not for me. But there will probably be just as many newcomers to the market.
Shares of Coinbase, the only major publicly traded cryptocurrency exchange, have fallen 84% since the company went public in April 2021. The company warned customers on Wednesday that their cryptocurrency holdings could be at risk if Coinbase goes bankrupt, although CEO Brian Armstrong has insisted that bankruptcy is not in the cards.
While Hileman is optimistic about the long-term prospects for cryptocurrencies, he said the current downturn shows that amateur investors should be cautious.
“I feel for everyone who has been beaten so badly by what is happening,” he said. “You should not invest more than you can afford to lose.”
This story first appeared on the New York Post and has been republished here with permission