Stock Groups

Small players lose faith in crypto after sell-off -Breaking

[ad_1]

2/2
© Reuters. FILE PHOTO – Representations for the Ripple and Bitcoin virtual currencies can be seen on a computer motherboard in this illustration photo, February 14, 2018. REUTERS/Dado Ruvic/Illustration

2/2

Savio Shriya, Hannah Lang and Lisa Pauline Mattackal

WASHINGTON/MUMBAI, (Reuters) – Nofe, a Nigerian 25-year-old, has been investing crypto currency since January. As cryptocurrency luna entered free fall, Nofe Isah lost her entire $5,000 savings.

Isah was a recent unemployed administrator officer and vowed that she would not invest again in crypto.

“I cannot believe that I fell for cryptocurrency,” she said to Reuters over the phone. I’m trying to not get depressed. Crypto is fine with me. It shouldn’t take my head.”

Crypto market is known for wild swings in price, but it slumped last Week as investors withdrew money from less risky investments amid concerns about rising inflation and higher interest rates.

On Thursday, cryptocurrencies such as, which are the largest in the world, plunged to $25,401, their lowest point since Dec. 2020. In November, it reached a new record of $69,000.

The second largest token was ether. It dropped 15%, more than 15 percent, to the lowest level since June. Luna, a popular digital currency that is backed institutional crypto investors and widely promoted on social media, lost nearly all its value.

Isah is one of many small traders who have taken to cryptocurrency in search for quick returns, despite regulators warning that there are high risks.

Robinhood (NASDAQ : ), which boasts 23 million customers in a range of assets has helped to encourage retail investment, even crypto. Robinhood reported that cryptocurrencies accounted for around 25% of its transaction-based revenue in the latest quarter.

The overall user base of crypto platforms has increased dramatically. Binance, which is the most popular crypto platform, has 118,000,000 clients in December, up from 43.4million users during the first quarter.

However, the internet was flooded with horror stories about last week’s troubles, and investors from retail expressed concern over their losses.

“I’m 49, big mortgage, 3 kids etc. My retirement party has been put on hold for the near future.Reddit: “,” Boring-Fun 3646 user said.

Reddit user AdventurousAdagio830 wrote: “It doesn’t seem real that it has cost me $180,000.”

‘DEATH SPIRAL’

A crypto-risky event was last week’s collapse of terraUSD. TerraUSD is a stablecoin that was designed to hold a constant price through an algorithm that used luna.

The system crashed when the coins were subject to heavy selling pressure. TerraUSD, which was intended to have a value $1, traded for 9 cents on Tuesday. However luna plummeted to almost zero according to CoinGecko data.

Tejan Shrivastava from Mumbai was a graphic designer who had been investing $250 in crypto currencies for over a year. Luna’s collapse wiped out his $250 investment.

It was in an endless death spiral. He told Reuters that all the money disappeared in just 15 minutes.

“I’m not sure if I will invest in crypto. My crypto portfolio is in liquidation, and I plan to sell it when it breaks even.”

Luna’s demise wiped out most its market value that was above $40 Billion as of April 1, CoinGecko data shows.

Online frustrations of retail investors spilled into real life.

Seoul police stated last week they were looking for a suspect following an unidentified person who rang Do Kwon’s doorbell at his apartment and then ran off.

A Seoul police officer said to Reuters that the suspect would be investigated by authorities if he had made investments in cryptocurrencies.

REGULATION PATCHY

Over its 13 year history, crypto has experienced many steep climbs and free fall in the course of its existence. Bitcoin plummeted by one fifth after hitting a record $69,000 in November. In just nine days, bitcoin had plunged nearly 40% six months ago.

Yet, crypto’s most recent crash, which saw the total sector’s value fall to $1.2 trillion (less than half the amount it had in November), led to luna’s destruction. Luna was, on May 1, the 8th-largest cryptocurrency according to market capitalisation.

Global regulation of cryptocurrencies is patchy. This means that traders of cryptocurrency and the panopoly of smaller tokens are often not protected against price drops.

However, it’s difficult to determine the magnitude of investors’ suffering from crypto-plunge and their repercussions for future appetite due to the market’s opaque nature.

Data published by UK financial watchdog last year showed that more than 4% of Britons own crypto currencies, which is roughly 2.3 Million people.

Britain’s crypto watchdog stated that the understanding of crypto is declining in comparison to one year prior, which “indicated that some crypto buyers may not understand exactly what they are purchasing”.

Nonetheless, small investors remain optimistic.

Eloisa Marsesoni was a cryptocurrency investor based in Tulum, Mexico.

“I’m looking for the dip” – We are all waiting on bitcoin to drop to $22,000. While it’s not too likely, it’s not impossible.

Marchesoni also hedges her crypto bets by purchasing physical assets such as cars, watches and real estate.

Bitcoin fell more than 20% in the first month of this year to $30,000, hovering at around $30,000 by Tuesday.

Regulators are on high alert. Last month, the British government stated that it would regulate stablecoins.

The U.S. Securities and Exchange Commission (SEC) is stepping up their enforcement. Gary Gensler (SEC Chair) stated this week that investors in cryptocurrency need more protections.

[ad_2]