How A Crypto Investment Is ‘Killing’ You
2022.12.06 01:24
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How A Crypto Investment Is ‘Killing’ You
Budrigannews.com – Jad Fawaz, an Abu Dhabi crypto trader, claims, “I’m almost bankrupt.” I’m laughing because it would be pointless to become even more depressed and frustrated about it.
The 45-year-old, who switched from working in real estate to trading a year ago, has seen his holdings disappear in recent months. The stress has kept him from sleeping for a week.
According to him, “I had about 40 coins, came down to 20 coins, came down to 10 coins, came down to five coins, and now I’m down to the last two coins, and it’s bitcoin and ripple.”
“So these are my last two coins, and I won’t sell them until I die.”
Enough is enough for many retail investors and traders.
According to exchange Bitfinex, balances on crypto exchanges, where retail investors typically transact, have decreased to approximately 2.3 million from their all-time high of 3.1 million in 2020. It added that self-custody wallet balances have not increased at the same rate, indicating that more money is being sold than stored.
Analysts at Bitfinex stated, “There are signs that a significant number of retail investors have been discouraged to the point of exiting crypto completely.”
True, Fawaz is not the only one.
Investors have had a rough year. The overall cryptocurrency market capitalization has lost $1.63 trillion, while Bitcoin’s price has decreased by 63%.
The market was hit hard by the demise of Sam Bankman-Fried’s FTX exchange.
According to Glassnode data, investors were forced to exit long-term positions in November, resulting in a realized loss of $10.16 billion over seven days—the fourth-largest loss ever recorded by this measure.
Linda Obi, a cryptocurrency investor in the Nigerian city of Lagos who is employed by blockchain company Zenith Chain, stated that “this is not the winter season anymore, this is a bloodbath, because the FTX crisis was like a domino that toppled so many companies.” Obi works for Zenith Chain.
The 38-year-old stated that she traded “a bit of everything,” including altcoins and memecoins, and that she was a “long-haul” investor with a five-year investment horizon.
She continued, “I’m gonna be very honest, I do think there’s a whole lot of hype around crypto, with influencer marketing and talking about crypto from your favorite celebrities.”
“People do not research before jumping in, and that ought to change. We have begun serious discussions regarding how we can actually advertise the space and clean it.”
DAVID VS. GOLIATH Losing money on cryptocurrency retail investments is nothing new. Between 2015 and 2022, a Bank of International Settlements (BIS) study found that 73% to 81% of cryptocurrency investors probably lost money.
As crypto’s asset class expanded, more sophisticated, deep-pocketed investors like hedge funds entered the market, making retail trading more difficult.
Adalberto Rodrigues, 34, of Lisbon, who also runs a software company, said, “It’s really difficult to trade on news because we don’t have inside information, a tweet can change everything.” Rodrigues trades crypto.
Blockchain data analysis, according to BIS researchers, revealed that the largest bitcoin holders frequently sold while smaller players bought, “making a return at the smaller users’ expense.”
According to a trader named Eloisa Marchesoni, she had approximately $2,000 on FTX but was unable to withdraw it. Marchesoni is confident that crypto will continue to attract smaller investors.
Marchesoni, who departs close to Tulum on the coast of the Yucatan Peninsula in Mexico, stated, “Retail will suck it up, like always.”
However, the substantial losses suffered by investors as a result of the FTX collapse may prompt regulators to take action, according to R3 communications chief Charley Cooper.
“Compared to high-flying crypto hedge funds, politicians have a much harder time ignoring calls from constituents who lost their savings or grocery money.”
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