“I’m almost bankrupt,” says JD Fawaz, a crypto trader in Abu Dhabi. “I’m laughing because there’s no point in getting more depressed and more depressed about it.”
The 45-year-old, who quit his real estate job a year ago to focus on trading, has seen a decline in his holdings in recent months. He has not been able to sleep for a week due to stress.
“I had about 40 coins and then I got down to 20 coins, then I got down to 10 coins, got down to five coins and now I am down to the last two coins, and that is bitcoin and ripple XRP,” he it is said.
“So these are the last two coins and I will die before I can sell them.”
For many retail traders and investors, enough is enough.
Exchange Bitfinex said bitcoin balances on crypto exchanges – where retail investors typically transact – have fallen to around 2.3 million from their 2020 all-time high of 3.1 million. Self-custody wallet balances have not grown at the same pace, indicating more sales than storage.
“There are signs that a large number of retail investors have become disenchanted to the point of exiting crypto altogether,” said Bitfinex analysts.
Actually, Fawaz is not alone.
It’s been a brutal year for investors. The price of bitcoin has dropped by 63% while the overall cryptocurrency market capitalization has lost $1.63 trillion in value.
The collapse of Sam Bankman-Fried’s FTX exchange triggered a long spike in the market.
Bitcoin investments lost $10.16 billion over 7 days in November, according to data from Glassnode, as investors were forced to exit long positions, the fourth biggest loss on record by that measure.
“It is no longer winter, it is a bloodbath,” said Linda Obi, a crypto investor in the Nigerian city of Lagos who works at blockchain firm Zenith Chain, as the FTX crisis was like a domino that toppled many companies. “
The 38-year-old said she was a “long haul” investor with an investment horizon of five years and traded “a little bit of everything”, including altcoins and memecoins.
“I’m going to be very honest, I think there is a lot of hype around crypto, influencer marketing and your favorite celebrities talking about crypto,” she said.
“People don’t do research, and just jump in, and that must change. We’ve started to have a serious conversation about how we can really clean and decarbonize space.”
david vs goliath
Crypto retail investors losing money is nothing new. A study by the Bank of International Settlements (BIS), conducted between 2015 and 2022, estimated that 73% to 81% of people lost money on their investments in cryptocurrencies.
Retail trading has become increasingly difficult as deeper-pocketed, more sophisticated investors such as hedge funds entered crypto as the asset class grew.
“It is really difficult to trade on news because we don’t have inside information, one tweet can change everything,” said Lisbon-based 34-year-old Adalberto Rodrigues, who trades crypto in addition to running a software firm.
BIS researchers said the blockchain data analysis found that the largest holders of bitcoin often sell while smaller players buy, “creating returns at the expense of smaller users”.
Eloisa Marchesoni, a trader who said she had almost $2,000 on FTX she was unable to withdraw, is certain crypto will retain its allure for small investors.
“Retail will suck it up like always,” said Marchesoni, who lives near Tulum on the coast of Mexico’s Yucatan Peninsula.
Yet huge investor losses from the FTX collapse could spur regulators into action, said Charlie Cooper, head of communications at blockchain technology firm R3.
“Politicians have a much harder time ignoring calls from constituents looking to lose their savings or grocery money than from high-flying crypto hedge funds.”
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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