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Tuesday, March 21, 2023

Crypto investors panic during market bloodbath: ‘I will lose my house’

Crypto investors panicked on Thursday as bitcoin fell to its lowest price in more than a year and other cryptocurrencies faced even worse selloff.

Victims of the bloodbath – which comes amid a broad stock market route – range from billionaire crypto titans who run major marketplaces such as Coinbase and Binance, to less retail investors who have poured their life savings into cryptocurrencies.

“I’ve lost over 450k USD, I 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 week . “I will soon lose my home. I will be homeless. Suicide is the only way out for me.”

“I will soon lose my house. I will be homeless. Suicide is the only way out for me,” read a post related to the bloodbath in the market.
Bloomberg via Getty Images

“My ex-colleague attempted suicide,” reads another top post on the forum. “He basically moved all his savings to crypto in 2021 and LUNA was a huge player in his portfolio.”

While Luna’s fall was the most spectacular, other cryptocurrencies are also in freefall. Bitcoin was trading around $28,300 on Thursday afternoon, down 20% over the past week and nearly 60% below its all-time high of $69,000 in November 2021. Other major cryptocurrencies including Ethereum and Solana are now worth a fraction of their all-time highs.

&Quot;In Crypto, The Strong Survive And The Weak Are Swept Away,&Quot; Said Garrick Hillman, Head Of Research At Blockchain.com.
“In crypto, the strong survive and the weak get swept away,” said Garrick Hillman, Head of Research at Blockchain.com.
NurPhoto via Getty Images

According to data from CoinMarketCap, the entire cryptocurrency market now has a market capitalization of $1.2 trillion – less than half of the $2.9 trillion in November.

“There are a lot of people out there who have taken some real peaks.” said Garrick Hillman, Head of Research at Blockchain.com. “In crypto, the strong survive and the weak are swept away.”

The ongoing route has fueled opponents, who have long argued that decentralized digital currencies were a foamy fad fueled by low interest rates and pandemic-era stimulus checks.

Charlie Munger
Berkshire Hathaway’s Charlie Munger Calls Cryptocurrencies a “Venereal Disease”.
Bloomberg via Getty Images

Prominent crypto critics include JPMorgan Chase boss Jamie Dimon, who once said bitcoin was “useless” – as well as billionaire Berkshire Hathaway executives Warren Buffett and Charlie Munger.

Munger, 98, recently referred to cryptocurrency as a “venereal disease” that he is “proud” to avoid. Shares of Berkshire Hathaway are up 5.6% over the past six months, while bitcoin is down 56%.

The crypto crash comes as the Federal Reserve hiked interest rates in an effort to calm inflation, sending high-risk tech stocks into a tailspin. According to Refinitiv data, the tech-heavy Nasdaq Composite Index is down 30% so far this year and has been heavily correlated with the price of bitcoin in recent weeks.

“We see more overlap in ownership than ever before, this kind of convergence between Wall Street and crypto,” said Hillman, visiting fellow at the London School of Economics.

Investors putting their money in buzzy tech stocks have struck a chord with crypto fanatics.

“Need help: lost everything in the stock market,” reads a popular post on the corporate message board Blind. “I invested every last dollar I saved in the stock market and I’m currently down about 85%.”

The self-identified 29-year-old Home Depot corporate employee said he mostly owns shares in tech firms including Meta, Peloton and Spotify.

“They have all the beds,” the employee raged. “Same thing with crypto.”

Bitcoin’s performance has been correlated with bullish tech stocks.
NurPhoto via Getty Images

According to Chris Kline of Bitcoin IRA, bitcoin’s decline could scare off some retail investors, who poured money into crypto during its stimulus-fueled run, while potentially tempting those hoping to buy the dip.

“It takes tourists away from true believers,” said Kline, who is the COO and co-founder of the crypto retirement investment site with 100,000 users. “There will be people who say, you know crypto isn’t for me. But there will be just as many new people in 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 insisted that bankruptcy is not in the cards.

Coinbase CEO Brian Armstrong insisted that his company would not go bankrupt – but his company warned customers that their cryptocurrency holdings could be at risk.
Getty Images for Vanity Fair

While Hillman is optimistic about the cryptocurrency’s long-term prospects, he said the current downturn shows that amateur investors need to be careful.

“I feel for anyone who was badly beaten by what is happening,” he said. “You shouldn’t put more into it than you can afford to lose.”

World Nation News Desk
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