The Desperation of Cryptocurrency Investors
It was a hot summer afternoon but the air was bleak when Scottish Borders, 29, from Scotland, told her story. It all started in February 2021 with a radio ad about Dogecoin, the cryptocurrency that billionaire Elon Musk actively promotes. Intrigued, Roy researched Dogecoin and used his credit card to invest a sum of EUR 2,500 in several different cryptocurrencies. Roy’s portfolio quickly grew to EUR 8,000, EUR 100,000 and then EUR 525,000. Roy entered the “bull” market (bullish).
Confessions of a cryptocurrency “addict”
Roy spends all his time watching YouTube videos and chatting with other crypto enthusiasts in closed Telegram groups. He has been treated for cocaine and alcohol addiction twice, succeeded in 2021 and works as a addiction counselor but is taking a break from childhood trauma. Roy soon relapsed. Every day, he checks his crypto wallet every 10 seconds, at night sets a constant alarm. He dreams of a life of financial freedom, no longer having to work. “I think I’m on top of the world. No one can tell me anything. Money will solve all my problems from now on.”
And then, the cryptocurrency market crashed. Bitcoin price dropped from £42,000 in May 2021 to £23,000 by the end of June this year. It peaked at £48,000 in November 2021 before falling to £26,000 at the end of January. At the time of writing, Bitcoin is trading around the £15,000 mark. “I feel like I lost everything because I invested everything in crypto. I drew every dream in it. So when the market crashed, my whole life followed,” said Roy.
Worse yet, Roy hit a string of misplaced bets. The value of his portfolio fell to 20,000 EUR then 3,000 EUR. “I lost control as I watched every opportunity for a better life slip away. I’m really desperate and completely isolated. I don’t want to see anyone anymore because I think I’m a failure.”
Every day, Roy sinks into alcohol and drugs to forget his “inexplicable” pain. I feel like I’m dying, dying…
In May, unemployed and broken, Roy enrolled in Castle Craig, one of the rare centers in the world that treats crypto addiction. Addiction fees are covered by health insurance. The portfolio is only 300 EUR. He was trying to rebuild his life and forgot about the idea that he should have withdrawn the money when he had the opportunity. “Painful. I hate myself for not withdrawing money.”
“They are just sobbing”
3,315 crypto victims have joined the “Bear Market Scream Therapy” group on Telegram. All expressed their despair by shouting, roaring, crying. Group admin – Giulio “feels bad, they can’t even scream anymore, they’re just sobbing”.
The crypto industry is in a precarious state, almost not a day goes by without bad news. The “roller coaster” turned around and brought crypto holders down.
Last month, major coins like Bitcoin and Ethereum lost more than a third of their value in just one week. Despite several rallies, this “bear” market is different. In May, when the stablecoin terra/luna pair collapsed, The Guardian technology editor Alex Hern had to wonder if this was the crypto industry’s “Lehman Brothers moment.” Stablecoins are advertised as stable against all fluctuations, promising a profit of 20% / year but now it is nothing.
A series of exchanges or lending companies announced to freeze investors’ withdrawals because of “extreme market conditions”. They cut staff drastically. Cryptocurrency investment fund Three Arrows Capital files for bankruptcy, while two founders disappear.
Everywhere is filled with chaos and pain. From retail investors to “sharks” and even celebrities, the fate is shared. At least two suicides in the UK and Taiwan due to cryptocurrency have been recorded. On the Reddit forum, users share information about suicide hotline phone numbers.
Cryptocurrency advocates say this is just a “winter” like 2013, 2018 and prices will bounce back, spring will come, bear market will turn into bull market. They urge people to “hold to die” and “buy the dip” (buy when prices fall). Many others are more worried: Can the ice melt?
While predicting a “winter” will come, crypto enthusiasts cannot know when and how far it will be. This market has become too “hot”. “Is this a surprise? I think it’s predictable,” said Professor Larisa Yarovaya at the University of Southampton. The Bank of England repeatedly warns investors about the risk of losing everything. People rushed to buy Bitcoin in 2020 and 2021 when interest rates were low and money was left in the blockade and thanks to support packages. But as interest rates and inflation rebound due to supply chain bottlenecks and the war in Ukraine, experienced investors will bet on haven assets.
Nassim Nicholas Taleb was once attacked when he published a report on the risks of cryptocurrencies, to the point of having to close his social media account. He couldn’t believe how “mental” the Bitcoin players were. He had seen many people who had insulted him blown out of a directory that offered some degree of satisfaction, after all, he sympathized with them. Meanwhile, the scammers, inciting people to pour money into cryptocurrencies, secretly withdraw their money and turn away.
The next generation may look back on this boom as a manic period, when money multiplied like bacteria and collective delusion pervaded financial markets. After all, who doesn’t want to get rich?