Nonfe Isah, a 25-year-old based in Nigeria, has been investing in crypto since January. Last week, he lost all of his $ 5,000 savings as cryptocurrency Luna entered free fall.
Isah, a recently retired administrative officer, vowed never to invest again in crypto.
“I can’t believe I fell into crypto,” he said Reuters by phone.
“I’m just trying to keep my balance. Crypto took my money, right. You must not take my head off. “
The crypto market, known for its volatility in the wild, has collapsed over the past week as investors find money in riskier assets amid rising volatility and rising interest rates.
Bitcoin, the world’s largest cryptocurrency, fell as low as $ 25,401 on Thursday, down from December. 2020. It reached a record high of $ 69,000 in November.
Smaller tokens, along with ether, the second largest token, dropped more than 15 percent down from June.
Luna – a digital currency widely supported on social media and backed by institutional crypto investors – has spent almost all of its value.
Small traders like Isah have turned to cryptocurrencies in hopes of a quick recovery, despite warnings from regulators that emerging assets could be very risky.
Read more: TerraUST sponsor says it will review other users; bitcoin back below $ 30,000
Platforms such as Robinhood, which has 23 million clients in a variety of assets, have helped to encourage commercial investment, including crypto.
About a quarter of Robinhood-based transaction revenue from cryptocurrencies in the first quarter of this year, Robinhood said in a recent revenue statement.
The general user numbers on crypto platforms have been balloon. Binance, the world’s largest crypto exchange, had 118 million customers last month, up from 43.4m in the first quarter of last year.
But after the turmoil last week, online forums were full of catastrophic myths, as retail investors expressed grief over their losses.
“I am 49 years old, have a large loan, 3 children etc. My retirement party is frozen for the foreseeable future! ”, A user with a Boring-Fun-3646 handle said on Reddit.
Another user with the AdventurousAdagio830 handle posted on Reddit: “It does not appear to be true that I lost $ 180,000.”
Spiral death
The epitome of crypto risks was the collapse of last week of terraUST, a stablecoin designed to maintain continuous value with a sophisticated algorithm involving Luna.
When these coins came under severe marketing pressure, the system crumbled. TerraUST – designed to keep the price of $ 1 – sold for about 9 cents on Tuesday while Luna fell close to zero, based on CoinGecko data.
Tejan Shrivastava, a 31-year-old Mumbai artist, who had invested in cryptocurrencies last year, had his $ 250 investment canceled by Luna’s collapse.
“She was trapped in a cycle of death. It’s all over in 15 minutes, ”he said Reuters.
“I don’t even know if I will invest in crypto in the future. I have a crypto portfolio, but I plan to end it when it comes to breaks. “
Luna’s collapse erased most of its sales value of more than $ 40 billion recently in early April, CoinGecko data shows.
Read also: Crypto assets spend 800bn on market value per month
The frustration of online investors has also spread to the real world.
Seoul police last week said they were searching for the suspect after an unidentified man knocked on the door of Do Kwon, the founder of terraUSD, and fled.
Police will investigate whether the suspect has invested in cryptocurrencies, Seoul police said Reuters.
A valid rule
Throughout its 13-year life, the crypto sector has been embroiled in a vertiginous rise and fall free of charge.
In November, for example, bitcoin fell five times less than two weeks after touching a record $ 69,000. Six months earlier, it had dropped to about 40pc in just nine days.
And the recent crypto crash – which pushed the combined value of $ 1.2 trillion, less than half of that last November – led to the crackdown on Luna, which on May 1 became the eighth largest cryptocurrency by market capitalization.
Cryptocurrencies are under patchy control around the world, with bitcoin traders and panapoly small tokens remaining insecure from price fluctuations.
But it is difficult to quantify the magnitude of the pain of trading investors from crypto plunge and the consequences for future interest given the opaque market environment.
In Britain more than 4pc of adults – some 2.3 million people – own cryptocurrencies, data published last year by UK watchdog showed.
A British watchdog said crypto awareness was declining compared to the previous year, “suggesting that some crypto users may not fully understand what they are buying”.
Still, some small investors keep the faith.
Eloisa Marchesoni, based near Tulum in Mexico and investing in a crypto syndicate, said she would not give up.
“I’m looking to buy a dip – we all expect bitcoin to drop to $ 22,000, which is not very likely but not ‘absolutely impossible’.”
Marchesoni also filed his crypto bet on tangible assets – “cars because you can rent them, watches, houses and land”.
Bitcoin was circulating around $ 30,000 on Tuesday, losing more than 20pc so far this month.
Administrators remain vigilant. The British government said last month it would regulate stablecoins.
The US Securities and Exchange Commission (US) is strengthening its position. Gary Gensler, chairman of the SEC, said this week that investors in cryptocurrencies want more security.
