Thursday, November 24, 2022 5:37:55 PM
‘They couldn’t even scream any more. They were just sobbing’: the amateur investors ruined by the crypto crash
"Note shurtha2000. Add, Biggest winners and losers from the Fed’s interest rate hike
[...]Cryptocurrencies have also been feeling the brunt since November, when the Fed more clearly telegraphed its intentions to reduce liquidity in the financial system. Bitcoin, Ethereum and other major cryptos have shown a solid downtrend for months and then crashed, as they priced in reduced stimulus and higher interest rates.
P - The Fed’s ongoing reduction in its own bond portfolio should further decrease support for stocks and crypto. "
‘You fall into this La-La land of thinking: I’m going to make it.’ Illustration: Scott Balmer/The Guardian
Fuelled by hype and hysteria, the market in bitcoin and other cryptocurrencies went from an obscure niche to a $3tn industry. Then the house of cards collapsed
Sirin Kale
Tue 12 Jul 2022 15.00 AEST
Last modified on Wed 13 Jul 2022 02.19 AEST
n the gloom of an 18th-century drawing room at the private rehab clinic Castle Craig, near Peebles in the Scottish Borders, Roy, a 29-year-old victim of the global cryptocurrency crash, tells me his story. It is a dazzling summer’s day, but here the mood is sombre. Roy shifts uncomfortably in his chair as he begins.
It all started in February 2021, with a radio advert for Dogecoin, a cryptocurrency promoted by Elon Musk, the founder of Tesla. Intrigued, Roy started Googling, eventually using his credit card to make an initial investment of €2,500 (£2,200) in a range of cryptocurrencies. The value of Roy’s portfolio climbed to €8,000, then €100,000, then €525,000. Roy had entered the market during an adrenalised bull run, meaning an extended period of price growth. A combination of Covid stimulus packages, low interest rates and an unprecedented level of enthusiasm for cryptocurrency among furloughed workers meant the bull was careering out of sight.
Roy started spending all his time watching YouTube videos and speaking to other cryptocurrency enthusiasts in private groups on the messaging app Telegram. He had been treated for cocaine and alcohol addiction twice, but by 2021 he was sober and working as an addiction counsellor, although he was on sick leave as a result of panic attacks brought on by childhood trauma. He soon relapsed. By day, he checked his cryptocurrency wallets every 10 seconds; by night, he set alarms to go off on the hour. He began fantasising about a life free of financial constraints, in which he would never have to work. “I thought I was on top of the world,” Roy says. “Nobody could tell me anything. Money would fix every single problem I faced from now on.”
--
I always thought the next project would bring me back up
again and I’d cash out before it crashed .. Roy
--
Then the cryptocurrency market crashed. The price of bitcoin fell from £42,000 in May 2021 to £23,000 by the end of June. It rallied to an all-time high of £48,000 in November, before diving to £26,000 at the end of January. Since then, it has been in near-continuous freefall. At the time of writing, bitcoin is hovering at £17,000. “It felt like I had lost my life,” says Roy. “Because I had invested everything in crypto. I had built every dream I had on there. So, when it came crashing down, my whole life came crashing down.”
[...]
“Was it surprising?” says Dr Larisa Yarovaya, an associate professor of finance at the University of Southampton. “I think it was quite predictable.” The Bank of England has repeatedly told cryptocurrency investors to be prepared to lose all their money. Investors bought bitcoin as a speculative punt in 2020 and 2021 because interest rates were low and many had spare cash due to lockdowns and economic stimulus packages. But when interest rates and inflation began to rise, fuelled by Covid-affected supply chains and the war in Ukraine, institutional investors preferred to put their money into safer assets.
“There is a fear factor rippling through financial markets about how out of control inflation is and whether central banks will be able to bring it under control,” says Hargreaves Lansdown’s Streeter. “When people feel richer, they are more likely to spend on riskier assets, like crypto. But in times of uncertainty, investors flee to safer havens.”
‘I worked my ass off doing 16-hour days for six years to earn this money’
… Alla Driksne. Photograph: @allasyummyfood
The mania around bitcoin and other cryptocurrencies was fuelled by a social media hype machine unprecedented in the history of financial markets. Investors touted new coins that were amassing huge returns, hung off the tweets of crypto-influencers and spoke in impenetrable jargon. “Demand for bitcoin related purely to the level of interest in this new technology, and that interest was manipulated by the companies that offered different cryptocurrencies and exchanges and startups,” Yarovaya says. “All of this happened on social media, meaning that investors didn’t even know whether there was genuine interest in crypto, or lots of Twitter bots encouraging people to buy. The system wasn’t transparent.”
https://www.theguardian.com/technology/2022/jul/12/they-couldnt-even-scream-any-more-they-were-just-sobbing-the-amateur-investors-ruined-by-the-crypto-crash
"Note shurtha2000. Add, Biggest winners and losers from the Fed’s interest rate hike
[...]Cryptocurrencies have also been feeling the brunt since November, when the Fed more clearly telegraphed its intentions to reduce liquidity in the financial system. Bitcoin, Ethereum and other major cryptos have shown a solid downtrend for months and then crashed, as they priced in reduced stimulus and higher interest rates.
P - The Fed’s ongoing reduction in its own bond portfolio should further decrease support for stocks and crypto. "
‘You fall into this La-La land of thinking: I’m going to make it.’ Illustration: Scott Balmer/The Guardian
Fuelled by hype and hysteria, the market in bitcoin and other cryptocurrencies went from an obscure niche to a $3tn industry. Then the house of cards collapsed
Sirin Kale
Tue 12 Jul 2022 15.00 AEST
Last modified on Wed 13 Jul 2022 02.19 AEST
n the gloom of an 18th-century drawing room at the private rehab clinic Castle Craig, near Peebles in the Scottish Borders, Roy, a 29-year-old victim of the global cryptocurrency crash, tells me his story. It is a dazzling summer’s day, but here the mood is sombre. Roy shifts uncomfortably in his chair as he begins.
It all started in February 2021, with a radio advert for Dogecoin, a cryptocurrency promoted by Elon Musk, the founder of Tesla. Intrigued, Roy started Googling, eventually using his credit card to make an initial investment of €2,500 (£2,200) in a range of cryptocurrencies. The value of Roy’s portfolio climbed to €8,000, then €100,000, then €525,000. Roy had entered the market during an adrenalised bull run, meaning an extended period of price growth. A combination of Covid stimulus packages, low interest rates and an unprecedented level of enthusiasm for cryptocurrency among furloughed workers meant the bull was careering out of sight.
Roy started spending all his time watching YouTube videos and speaking to other cryptocurrency enthusiasts in private groups on the messaging app Telegram. He had been treated for cocaine and alcohol addiction twice, but by 2021 he was sober and working as an addiction counsellor, although he was on sick leave as a result of panic attacks brought on by childhood trauma. He soon relapsed. By day, he checked his cryptocurrency wallets every 10 seconds; by night, he set alarms to go off on the hour. He began fantasising about a life free of financial constraints, in which he would never have to work. “I thought I was on top of the world,” Roy says. “Nobody could tell me anything. Money would fix every single problem I faced from now on.”
--
I always thought the next project would bring me back up
again and I’d cash out before it crashed .. Roy
--
Then the cryptocurrency market crashed. The price of bitcoin fell from £42,000 in May 2021 to £23,000 by the end of June. It rallied to an all-time high of £48,000 in November, before diving to £26,000 at the end of January. Since then, it has been in near-continuous freefall. At the time of writing, bitcoin is hovering at £17,000. “It felt like I had lost my life,” says Roy. “Because I had invested everything in crypto. I had built every dream I had on there. So, when it came crashing down, my whole life came crashing down.”
[...]
“Was it surprising?” says Dr Larisa Yarovaya, an associate professor of finance at the University of Southampton. “I think it was quite predictable.” The Bank of England has repeatedly told cryptocurrency investors to be prepared to lose all their money. Investors bought bitcoin as a speculative punt in 2020 and 2021 because interest rates were low and many had spare cash due to lockdowns and economic stimulus packages. But when interest rates and inflation began to rise, fuelled by Covid-affected supply chains and the war in Ukraine, institutional investors preferred to put their money into safer assets.
“There is a fear factor rippling through financial markets about how out of control inflation is and whether central banks will be able to bring it under control,” says Hargreaves Lansdown’s Streeter. “When people feel richer, they are more likely to spend on riskier assets, like crypto. But in times of uncertainty, investors flee to safer havens.”
‘I worked my ass off doing 16-hour days for six years to earn this money’
… Alla Driksne. Photograph: @allasyummyfood
The mania around bitcoin and other cryptocurrencies was fuelled by a social media hype machine unprecedented in the history of financial markets. Investors touted new coins that were amassing huge returns, hung off the tweets of crypto-influencers and spoke in impenetrable jargon. “Demand for bitcoin related purely to the level of interest in this new technology, and that interest was manipulated by the companies that offered different cryptocurrencies and exchanges and startups,” Yarovaya says. “All of this happened on social media, meaning that investors didn’t even know whether there was genuine interest in crypto, or lots of Twitter bots encouraging people to buy. The system wasn’t transparent.”
https://www.theguardian.com/technology/2022/jul/12/they-couldnt-even-scream-any-more-they-were-just-sobbing-the-amateur-investors-ruined-by-the-crypto-crash
It was Plato who said, “He, O men, is the wisest, who like Socrates, knows that his wisdom is in truth worth nothing”
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