Even if you don’t know anything about crypto, Bitcoin confuses you and you think Ethereum is a Marvel character, which isn’t complex is that the crypto crash caused investors to lose money. large amounts of money and in some cases they all had. The crash was so good that some people called it the Lehman Brothers of the crypto world. The market value of cryptocurrencies, nearly $ 3 billion in November, dropped to just $ 1.3 billion.
The largest crypto-trading platform in the United States, Coinbase, lost half of its value in a week and warned users that they could lose money if the company went bankrupt. Founder Brian Armstrong has seen $ 11 billion gone from his personal fortune. He was just one of those “crypto bros” who lost huge amounts. A trader with 288,000 Bitcoins lost $ 800 million a day after the price fell, while Elon Musk saw his $ 1.5 billion Bitcoin investment lose $ 300 million.
For those who don’t already know, cryptocurrency is a “virtual currency” that is decentralized and therefore does not require an intermediary, i.e., a bank. This is considered a more equitable way of making finance, but it is completely unregulated and can be very difficult to predict.
It was shown on May 11 when the value of one coin, the Luna, fell which had an impact on other coins. The fall was so catastrophic that questions arose about the future of the industry. Some say investors are so scared that it marked the start of a long “crypto winter,” while others called it an “ice age.” With one in five young Londoners (18-34) investing in crypto, what does this mean for the capital, the UK’s crypto-hype hub? Has the Bitcoin bubble finally burst?
Terra (Luna) calls herself a “stablecoin”, but it turns out to be anything but. It lost more than 99% of its value in 24 hours. The industry panicked, investors rushed to make their money, and the desperate losers in Luna posted online how they would lose their homes.
The cause of the accident is disputed by the parties involved. Some say this is due to a general collapse in the financial markets. “It’s not just crypto, it’s everything,” said Oleg Giberstein, co-founder of London-based crypto trading startup Coinrule. “Netflix is down, tax rates are down. Markets are depressed. Crypto is a dangerous asset class, so it’s the most affected. Oleg, who set up Coinrule three years ago ago, said Luna was “an absolute disaster.” “I know many who know the industry and have lost big money.It looks like a solid project but uses unsustainable mechanisms.It is considered stable and safe but I didn’t touch it because I thought the risks would be minimized.There was an element of false advertising and people who knew nothing about crypto went into it because they thought it was relatively risk-free.
Over the past few years, crypto hype has resurfaced. Professor of financial economics at Loughborough University, Alistair Milne said it was due to the pandemic. “A lot of people had a break during the lockdown and had a little bit of spare money. People were more confident and excited.
For Professor Milne, this cycle of interest and crash is an inevitable part of something as volatile as cryptography. “That’s what you should expect in crypto,” he said. “There’s no underlying value that determines the price, it’s short-term speculation-the news, what people think about it, what celebrities are advertising on it. When people are more interested worried, they withdrew their money and the price dropped sharply.External factors such as the war in Ukraine and rising inflation have caused investors to be more risk averse.
This is not the first time the industry has collapsed. In 2017, the value of Bitcoin increased from £ 20,000 to £ 3,000. “Everyone wants this to end and wonders if the bubble will burst,” Oleg said. “But it will also come back. It’s a cycle. There’s a big run-up and then a crash every two or three years. With each new cycle, we take bigger steps forward. Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, is unsure. “A shock has come down in the crypto market and I don’t think it will be eliminated anytime soon. I think it’s all part of the rush to risky assets. During the pandemic, crypto fans were given the wrong sense of security.Now they are faced with a rude awakening.So many people will lose money this time.They thought they were making a quick profit but they had no idea where they were investing.
Susannah thinks regulation is needed immediately and “stablecoins” will be the first to be targeted. “It’s dangerous,” he said. “It tells everyone that there are suicide warnings on some of the exchanges.”
What also surprised him was that he noticed that crypto had become the topic of conversation on the playground. “I hear moms talking about how their crypto wallets are pumping and I think, do you have any idea what you’ve invested your money in?
“It’s a bet,” he added. “You’re betting on a game you don’t know the rules. They have not been written yet. Don’t invest unless you have money you don’t mind losing.
A Londoner learned the hard way. In the recent crash he lost £ 9,000. He lost 50% of his investment and a third of his savings were locked in crypto, in his hopes of buying a house that could no longer be reached. The 27-year-old, who prefers to remain anonymous, said: “I try not to associate too much emotion with it. It’s easy to say now that I’m sorry for investing so much money, but I didn’t say that on the rise. I know it is high risk and high reward.
For him, that was part of the call. “Buying a home is inaccessible so things like this are becoming more attractive.” He started there a year and a half ago and now has eight different cryptocurrencies. However, the accident caused him to be re -examined. “I’m not going to get involved in a while,” he said. “The worst thing I can do is panic and remove it, so I’m going to be indifferent and temporarily look for safer options. It’s a lot of money and it really cost me, but I negotiated with it.
He’s not the only one trying to accept defeat. Rapper and YouTube star KSI tweeted that he has lost nearly £ 3million. The Luna he bought for $ 2.8 million dropped to $ 1,000, which led him to tell his fans that he was “packing” his crypto habit. “It’s okay because I’m not dead,” he wrote. “My family, my friends and my work ethic are still there.”
However, for some it ruined lives. One Reddit user said, “I lost over $ 450,000, I can’t pay the bank. I am about to lose my home. I’m going to be a vagabond. My only question is suicide.
Another, who said he became a millionaire at the age of 20 thanks to crypto, lost his fortune and that of his girlfriend. “I’m looking for a good long -term hold,” he added. “My cousin told me about Luna. I was really intrigued by what he told me, so I figured my money was safe there. Stupidly, I bought over 55,000 Luna for $ 80+ during the downturn. Now it was worth less than $ 500 and when he told his girlfriend, she kicked him out. “Hopefully I can go back in time,” he said.
Cash out includes using the exchange service, converting your crypto into pounds or euros and withdrawing it from your bank-although this is no longer an option for those who have had Luna.
Oleg hopes this isn’t the end for crypto and he thinks London deserves to know its buzz. “In 2017 and 2018, you could hardly attend crypto events in London because of interest. It crashed and everyone became more comfortable, but it rebuilt itself and it will happen this time.
Sam Kopelman, UK Country Manager of Luno, a crypto exchange, agrees. “London has always been at the forefront of financial services, and the next step is to lead the world in crypto innovation. Our research found that nearly one in five young Londoners now invest in crypto, in part because they have failed at the returns of the traditional financial system. Following the start of the loan, the Treasury announced plans to make the UK a “global crypto hub” last month, and the city will host the architects of UK crypto’s success.
Whether you think crypto is the future or just another way to play, defenders aren’t ready to give it up.