Forget about cryptocurrency winter; this is a bitcoin “bloodbath”

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Forget about cryptocurrency winter; this is a bitcoin “bloodbath”

“I’m almost bankrupt,” says Jad Fawaz, an Abu Dhabi-based cryptocurrency dealer. “I’m smiling because there’s no purpose in adding to my depression and frustration.”

“I had about 40 coins, then 20 coins, then 10 coins, then five coins, and now I’m down to the last two coins, which are bitcoin and ripple XRP,” he adds.

The 45-year-old, who abandoned his real-estate career to focus on trading a year ago, has watched his holdings dwindle in recent months. Because of the tension, he hasn’t slept in a week.

“These are the final two coins, and I’m going to die before I sell them.”

Bitcoin balances on crypto exchanges, where individual investors frequently transact, have dropped to roughly 2.3 million from an all-time high of 3.1 million in 2020, according to exchange Bitfinex. Self-custody wallet balances have not grown at the same rate, indicating that there is more selling than storage, according to the report.

Enough is enough for many retail traders and investors.

“There are indications that a considerable percentage of ordinary investors have become frustrated to the point of abandoning cryptocurrency outright,” Bitfinex analysts stated.

Fawaz is not alone in this.

Investors have had a difficult year. Bitcoin’s price has fallen 63%, while the whole cryptocurrency market capitalization has declined by $1.63 trillion. The failure of Sam Bankman-FTX Fried’s exchange was a long nail driven into the market.

According to Glassnode data, the 7-day realised loss in bitcoin investments in November was $10.16 billion as investors were compelled to quit long-term positions, the fourth-largest loss on record by this metric. “This is no longer the winter season; it’s a carnage, because the FTX issue was like a domino that fell so many enterprises,” said Linda Obi, a crypto investor and blockchain firm Zenith Chain employee in Lagos, Nigeria.

The 38-year-old described herself as a “long-term” investor with a five-year investment horizon who traded “a little bit of everything,” including altcoins and memecoins. “To be honest, I do believe there is a lot of buzz around crypto, with influencer marketing and your favourite celebs talking about crypto,” she continued.

“People don’t do their homework and just dive in, and this needs to change.” We’ve begun real discussions on how we can actually sterilise and publicise the facility.” Retail crypto investors losing money is nothing new. A Bank of International Settlements (BIS) analysis done between 2015 and 2022 estimated that 73% to 81% of cryptocurrency investors lost money.

As the asset class expanded in popularity, retail trading became increasingly challenging as deeper-pocketed, more skilled investors such as hedge funds emerged. “It’s incredibly difficult to trade on news since we don’t have inside information, and a tweet may alter everything,” said Adalberto Rodrigues, 34, of Lisbon, who trades cryptocurrency and runs a software startup.

News Summary:

  • Forget about cryptocurrency winter; this is a bitcoin “bloodbath”
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