Is the cryptocurrency market over?
During the NFL Final, last February, billionaire NBA star LeBron James appeared in front of television screens in an advertisement for Crypto.com.
The purpose of the 30-second announcement was to promote the popular cryptocurrency trading platform (Crypto.com).
James addressed millions of viewers: "If you want to make history, you have to let yourself go."
Words then splashed across the screen as the ad ended with: "Fortunate comes for the brave."
But last week, Krypto.com laid off 5% of its staff.
"The company is making tough but necessary decisions," its CEO tweeted.
The cryptocurrency market was built in part on endowing its supporters with a mixture of pride, enthusiasm and optimism.
Their motto in the face of skeptics was "Enjoy being poor."
They say the future is slipping by crypto skeptics without catching up.
But at times, cryptography seemed like the madness, which brings together wonderful people but it has been like other bubbles throughout history and shares some characteristics, marked by speculation next to illusion, greed, and a lack of respect for risk.
Now, with markets plummeting and global inflation rising, cryptocurrencies were among the first assets to be dumped to raise cash.
money drain
The Wall Street Journal says that since Bitcoin reached an all-time high last November, nearly $2 trillion has been wiped out of its value.
Bitcoin itself fell below $19,000, more than 70% from an all-time high of $67,802.30.
Cryptocurrency exchanges are bleeding users' money, and crypto companies have laid off employees under the banner of restructuring.
The cryptocurrency world is no stranger to booms and busts in markets.
But many investors and practitioners feel this collapse in cryptocurrencies more acutely than its predecessors.
When the market is stable and clear, some crypto products, coins or companies may disappear.
Bitcoin was launched as a form of electronic money in 2009 by an anonymous creator named Satoshi Nakamoto, then its price has risen precariously, randomly, and sometimes violently due to several factors, including that investors in cryptocurrency believe in the failure of the current financial system and that crypto is the future.
watershed moment
In April 2021, Coinbase Global, the largest US cryptocurrency exchange, worth $85 billion, launched as a watershed moment in the cryptocurrency world, becoming the first major public company focused on Bitcoin.
Last August, the US city of Miami launched its "Miami Coin", a cryptocurrency bearing the city's mark.
Earlier this year, more than 25,000 people attended the Miami Crypto Conference, and Miami Mayor Francis Suarez presided over the unveiling of an 11-foot-tall statue of a black bull, to rival the famous bull that symbolizes "Wall Street", the New York Stock Exchange. .
“I am more bullish than ever about Bitcoin,” said Microstrategy co-founder Michael Saylor, who has leveraged his software company and put more than 100,000 bitcoin, worth more than $6 billion at its peak price as a balance sheet item.
ARK Investments CEO Katie Wood said that "Bitcoin will rise to more than $1 million."
The co-founder of PayPal Holdings, Peter Thiel, suggested creating an "enemy list" of people who oppose cryptocurrency.
Dan Gunsberg, who started investing in bitcoin in 2015 and is today CEO of crypto company HXRAO Network, said the enthusiasm was a sign of trouble in the crypto market. It can stay high, because gravity brings it back to Earth."
Abandoning assets
As the fear of an increase in inflation intensifies, investors are abandoning assets they consider risky in their portfolios.
Stocks of slow-earning companies are also dropping, and many new technology companies lose more than half their value in the first half of the year.
So far, Bitcoin has lost more than half its value and is currently trading at its lowest level since late 2020. Ethereum, another popular cryptocurrency, is down about 68% so far this year.
"The clout of crypto is now collapsing," Alex Thorne, head of research at Galaxy Digital Holdings, a crypto-focused financial services company, said.
"A large number of crypto funds will not survive this collapse," he added.
revenue decline
The carnage of cryptocurrency prices has spread to companies that provide services in the crypto market.
For exchanges, which are driven by trading activities, revenue decreased with selling.
Coinbase revealed a loss of $429.7 million in the first quarter in May, and said its users are leaving the platform, even as executives sell shares and take profits.
In June, for the first time since its founding in 2012, Coinbase laid off nearly a fifth of its workforce, and its stock is trading at around $51, compared to a high of $429.54 during the first day of trading on April 14, 2021. It also allowed Other companies, including "Crypto.com" for employees to leave.
In early May, the ongoing downward pressure in the cryptocurrency market broke something big.
The stablecoin TerraUSD, a cryptocurrency intended to hold a fixed value of one dollar, collapsed with another currency, Luna, overnight, and $40 billion worth of the two cryptocurrencies disappeared.
The Wall Street Journal reported that a cryptocurrency-focused hedge fund Three Arrows Capital is considering strategic options, including selling assets or accepting a bailout by another company, after incurring heavy losses.
Bitcoin future
Despite the losses, some investors remain optimistic.
Among them is Marshall Johnson Jr., a 54-year-old educational TV producer in Maryland, who began buying bitcoin in 2021, when it was worth $38,000.
His plan at the time was to slowly put in enough money to own one whole Bitcoin.
He still believes in the future of Bitcoin, and has not changed his plan despite the sell-off and despite the fact that he lost money on paper.
Although the price of Bitcoin has fallen, he believes that it will reach its target soon.
"I'm closer than I was a year ago," he said.
"In the long run, we believe very much in cryptocurrency," said Sean Maguire, a partner at Sequoia Capital, who invests in cryptocurrencies.
"But in the short term, we have to be careful," he added.
In the same vein, Dan Held got into Bitcoin in 2012 and was drawn to the idea of a new financial system at a time most people hadn't even heard of.
Held moved from Texas to San Francisco, started going to Bitcoin meetups and immersed himself in crypto culture.
Held has been preaching bitcoin for years, has a large following on Twitter, and is motivated by the idea that bitcoin solves fundamental problems in the current financial system.
So, none of the previous crashes, not even the current one, has shaken Held's belief. "I don't see this as the end of Bitcoin," he said.
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