A crypto dealer in Abu Dhabi named Jad Fawaz declares, “I’m almost bankrupt.” There is no point in expressing further dejection and angst over it, therefore I’m smiling.
The 45-year-old has seen his holdings disappear in recent months after quitting his real estate career a year ago to concentrate on trading. The worry has kept him from sleeping for a week.
He explains, “I had roughly 40 coins, then I went down to 20, then to 10, then to five, and now I’m down to the last two coins, which are bitcoin and ripple XRP.
I shall pass away before selling these last two coins, thus they are the last two.
For many small-time investors and dealers, enough is enough.
According to exchange Bitfinex, the number of bitcoin balances on cryptocurrency exchanges, where ordinary investors frequently interact, has decreased from its all-time high of 3.1 million in 2020 to roughly 2.3 million. Self-custody wallet balances have not increased at the same rate, indicating that more money is being sold than stored, it continued.
According to Bitfinex experts, “there are evidence that a sizable number of retail investors have been deterred to the point of completely quitting crypto.” Fawaz is not alone, in fact.
Investors have had a terrible year. While the market capitalization of all cryptocurrencies has lost $1.63 trillion in value, the price of Bitcoin has fallen 63%.
The market was pounded hard by Sam Bankman-FTX Fried’s exchange’s demise.
According to Glassnode data, a 7-day realised loss of $10.16 billion in bitcoin investments occurred in November as a result of investors being compelled to sell long-term positions. This loss ranks as the fourth-largest on record on this metric.
Because the FTX issue was like a domino that brought down so many businesses, this is no longer the winter season, according to Linda Obi, a cryptocurrency investor who works for the blockchain company Zenith Chain in Lagos, Nigeria.
The 38-year-old claimed to trade “a bit of everything,” including altcoins and memecoins, and described herself as a “long-haul” trader with a five-year investment horizon.
Since influencer marketing and your favourite celebs have been talking about cryptocurrency, she continued, “I’m going to be quite honest, I do think there’s a whole lot of buzz about crypto.”
“People should stop jumping in without doing their investigation. We have begun to seriously discuss how we can genuinely sterilise and promote the place.
Goliath against David
Losses by cryptocurrency retail investors are nothing new. According to a Bank of International Settlements (BIS) analysis, between 2015 and 2022, between 73% and 81 percent of cryptocurrency investors probably lost money.
With the entry of hedge funds, retail trading became increasingly difficult.
“It’s incredibly hard to trade on news since we don’t have inside information, a tweet may alter everything,” said Adalberto Rodrigues, 34, of Lisbon, who runs a software company and trades cryptocurrencies on the side.
Blockchain data analysis, according to BIS experts, revealed that the biggest bitcoin holders frequently sold their holdings while lesser players bought, “earning a profit at the expense of the smaller users.”
A trader named Eloisa Marchesoni, who claimed to have roughly $2,000 on FTX that she was unable to withdraw, is confident that cryptocurrency would continue to appeal to smaller investors.
Retail will suffer, as usual, said Marchesoni, who departs from a location close to Tulum on the Yucatan Peninsula in Mexico.
However, the significant investor losses from the FTX crash may prompt regulators to take action, according to Charley Cooper, director of communications at blockchain technology company R3.
Unlike high-flying crypto hedge funds, politicians find it far harder to ignore calls from voters who lost their savings or grocery money.