Crypto investors panic during market bloodbath: ‘I will lose my home’

Crypto investors panicked on Thursday as the value of cryptocurrencies including bitcoin plunged, with some saying they would lose their homes as a result.

Crypto investors panicked on Thursday as bitcoin plummeted to its lowest price in more than a year and other cryptocurrencies endured even worse sell-offs.

Victims of the bloodbath — which comes amid a broader stock market rout — range from the billionaire crypto titans who run leading marketplaces such as Coinbase and Binance to lowly retail investors who have poured their life savings into cryptocurrencies, the New York Post reported.

“I lost over 450k usd, I cannot pay the bank,” reads one of the top posts on the Reddit forum for Terra Luna, a cryptocurrency that has lost more than 99 per cent of its value over the past week.

“I will lose my home soon. I’ll become homeless.”

“My ex-colleague attempted suicide,” reads another top post on the forum. “He basically moved all of his savings to crypto in 2021 and LUNA was a massive player in his portfolio.”

Another user wrote: “This seems unreal I can’t believe this is happening, I basically lost 60k overnight with what could have been considered a risk-off asset 3 days and I can’t do anything about it. Can’t sell, can’t buy, I can just watch it burn. This is insane. What the actual f**k.”

While Luna’s collapse is the most spectacular, other cryptocurrencies are also in freefall.

Bitcoin was trading around $US28,300 ($AU41,200) Thursday afternoon, down 20 per cent over the past week and nearly 60 per cent lower than its all-time high of $US69,000 ($AU100,000) in November 2021. Other major cryptocurrencies including ethereum and solana are now worth fractions of their all-time highs.

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A cryptocurrency ATM setup in a convenience store on May 12, 2022 in Miami, Florida. Picture: Joe Raedle/Getty Images/AFP

The entire cryptocurrency market now has a market capitalisation of $US1.2 trillion — less than half of the $US2.9 trillion it was worth in November, according to CoinMarketCap data.

“There’s a lot of folks out there who have taken some real bruises.” said Garrick Hileman, research chief at Blockchain.com. “In crypto, the strong survive and the weak get flushed.”

The ongoing rout gives fuel to detractors who have long argued that the decentralised digital currencies were a frothy fad fuelled by low interest rates and pandemic-era stimulus checks.

Prominent crypto critics include JPMorgan Chase boss Jamie Dimon, who once said bitcoin is “worthless” — as well as billionaire Berkshire Hathaway executives Warren Buffett and Charlie Munger.

The 98-year-old Munger recently referred to cryptocurrencies as a “venereal disease” that he was “proud” to have avoided. Berkshire Hathaway shares are up 5.6 per cent per centover the past six months, while bitcoin is down 56 per cent.

The crypto crash comes as the Federal Reserve hikes interest rates in an effort to cool inflation, sending high-risk tech stocks into a tailspin. The tech-heavy Nasdaq composite index is down 30 per cent so far this year and has been heavily correlated with the price of bitcoin in recent weeks, according to Refinitiv data.

Charlie Munger (right) pictured with Warren Buffett, described cryptocurrencies as a ‘venereal disease’. Picture: Johannes Eisele/AFP

“We see more overlap in ownership than we ever have, this kind of convergence between Wall Street and crypto,” said Hileman, who’s also a visiting fellow at the London School of Economics.

Investors who poured their money into buzzy tech stocks have taken a beating alongside crypto fanatics.

“Need help: LOST EVERYTHING in the stock market,” reads a popular post on the corporate message board Blind. “I invested every last dollar I saved in the stock market and I’m currently down almost 85 per cent.”

The self-identified 29-year-old Home Depot corporate employee said he mostly owned shares of tech firms including Meta, Peloton and Spotify.

“They have all s**t the bed,” the employee raged. “Same thing with crypto.”

Gold plated souvenir cryptocurrency Tether (USDT), Bitcoin and Etherium coins. Picture: Justin Tallis/AFP

Bitcoin’s plunge is likely to scare off some of the retail investors who poured money into crypto during its stimulus-fuelled surge, while potentially enticing those hoping to buy the dip, according to Chris Kline of Bitcoin IRA.

“It takes away the tourists from the true believers,” said Kline, who’s the COO and co-founder of the crypto retirement investment site with 100,000 users. “There will be folks that say, you know what, crypto’s just not for me. But there will probably be just as many new folks coming into the market.”

Shares of Coinbase, the only major publicly traded cryptocurrency exchange, have fallen 84 per cent since the company went public in April 2021. The company warned customers on Wednesday that their cryptocurrency holdings could be at risk if Coinbase goes bankrupt, although CEO Brian Armstrong insisted that bankruptcy isn’t in the cards.

While Hileman is optimistic about cryptocurrencies’ long-term prospects, he said the current downturn shows amateur investors need to be careful.

“I feel for anyone who has been badly beaten up by what’s happening,” he said. “You shouldn’t put more into this than you can afford to lose.”

This story first appeared on the New York Post and has been republished here with permission