“My life has completely collapsed.” How has cryptocurrency destroyed so many investors?

In February last year, Roy, 29, heard a radio ad about Dogecoin and used his credit card to make an initial investment of € 2,500 in a pool of cryptocurrencies. The value of Roy’s wallet rose to 8 thousand euros, then 100,000 euros, then 525 thousand euros.

In May 2021, the price of Bitcoin fell from 42,000 pounds, then to 23,000 pounds at the end of June, and then climbed to an everyday high of 48,000 pounds in November, before rising to the end of January last year until 26,000 pounds dived.

Since then, the free fall has been almost continuous, until now it is about 17,000 pounds sterling. With the collapse of the cryptocurrency market, Roy’s life was falling apart after he started proposing a life free of financial constraints, in which he would not have to work, according to a report by the Guardian newspaper.

setback

During the rise of cryptocurrencies, “I thought I was on top of the world. No one could give me any instructions or tell me what to do to do it, the money will solve every problem I have from now on. had fixed. ”

“I invested everything in coding,” says Roy, who is currently in a private rehabilitation clinic near Peebles on the Scottish border. “I built every dream I had there. So, when it collapsed, my whole life collapsed.”

Roy made a series of bad bets, his portfolio declining to € 20,000, then € 3,000.

“I got out of control because I saw all my chances of a better life disappear,” he says. “I became completely frustrated, cut off from the world and did not want to see anyone.”

Roy relapsed and spent his day drinking and using drugs, and he had a stomach ulcer, I can not describe the pain, I drank and vomited and drank and wanted to keep it, until the pain was gone, but I may vomit all the time, until I feel like death. ”

Last May, Roy became unemployed and without money and was admitted to Castle Craig, one of the few centers in the world that deals with “cryptocurrency addiction”.

With his cryptocurrency portfolio worth around € 300, Roy is now trying to rebuild his life, suppressing the painful idea that he should have withdrawn his money when he had the chance.

From $ 3 billion to $ 1 billion

The cryptocurrency industry is now in a state of turmoil, and the shock wave has caused serious financial suffering to many people, according to financial analyst Susanna Streeter.

This can be clearly seen in a group on Telegram, the victims of the cryptocurrency crash gathered to make short cries of sadness and sharp cries of pain, to blow out their suffering and anger. Its members number more than 3300 thousand people.

Over the past month, major currencies, including bitcoin and ethereum, have fallen by more than a third in just one week, while bitcoin has fallen dramatically on several occasions.

The crypto-currency market, which was $ 3 trillion until last year, has shrunk to $ 1 trillion.

The collapse led to more sales. Celsius Network suspended withdrawals for its 1.7 million customers this month, and Coinbase, one of the largest cryptocurrency exchanges, announced it would cut its workforce by 18 percent. At the end of June, the hedge fund Three Arrows Capital, which was widely used in cryptocurrency-related businesses, was liquidated.

As a result of the collapse of the crypto market, at least two suicides have been reported in the UK and Taiwan.

According to the Guardian analysis, panic and turmoil are everywhere, and it looks like things will get worse.

Advocates, on the other hand, argue that this is nothing more than a crypto-winter, mocking so-called investors who flee at the first sign of trouble and plead to wait.

Was the collapse sudden?

This collapse was completely predictable, says Larisa Yarovaya, professor of finance at the University of Southampton. “The Bank of England has repeatedly asked crypto investors to be prepared to lose all their money.”

Investors bought bitcoin as a speculative gamble in 2020 and 2021 because interest rates were low, and many had savings in cash due to restrictions and economic stimulus packages.

But when interest rates and inflation began to rise due to the effects of the Corona pandemic and when supply chains were affected by the Russian war against Ukraine, investors chose to put their money in safer assets.

There are also beneficiaries

The obsession with Bitcoin and other cryptocurrencies has been driven by social media hype unprecedented in the history of financial markets.

Investors have promoted new cryptocurrencies that have yielded huge returns, and influencers have tweeted about cryptocurrencies. ”

It seems likely, as in the 2008 financial collapse, that the ill-intentioned actors who exacerbated it will withdraw unscathed.

What’s more, many of the investors who bought in and caused the crypto boom have done so to restore security after a decade of stagnation and uncertainty.

This boom can be seen by future generations as a period of mania, when money multiplied like bacteria, and a collective error took over financial markets. It may seem incomprehensible, but it should not be, the newspaper concludes. .

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