It’s not fun
The fall comes after nearly two years of excitement, which saw Bitcoin soar from less than $ 5,000 in March 2020 to nearly $ 70,000 in November 2021. This was accompanied by foam in many other risky assets as young people, stranded at home due to the pandemic, with money to burn them with stimulus controls and stimulated by like-minded people on forums like RedSit’s WallStreetBets: they started trading for the first time . Crypto was a favorite of retailers, and new concepts like NFT and DeFi provided amazing returns, at least temporarily.
“With the recession and inflation approaching, everyone has this fear and everyone in the crypto market is reacting to this fear as well. This is scary when we hold on to our beloved life.”
Investor Nicole Vicente
The change in vibration has not only been in the cryptographic space, of course. Inflation is the hottest in four decades, Wall Street is moving into a bearish market, fears of recession are growing and meme stocks that made up the “retail craze” are sinking again in the crisis in which they floated for years before their rediscovery. boring daily traders on Reddit.
It is clear when looking at monthly active users of Robinhood, the gateway investment platform for many new traders, it fell nearly 60 percent in May compared to a year earlier, according to Similarweb data , which tracks website activity on the Android operating system. The story is similar to most other online brokerages.
Julian Barrios, 26, went from earning trading options of up to $ 800 a week to less than $ 100. Eventually, it stopped trading options altogether due to the wild change in prices.
“It takes away the fun of seeing all the volatility,” the Fort Lauderdale, Florida mechanic said. “Right now, you’re definitely going to feel frustrated or stressed. The last two months have been really hard for me.”
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Frustration and stress
Some call it the beginning of another “cryptographic winter.” The phrase is most often used to describe the period of stagnation from early 2018 to mid-2020, when prices plummeted and innovation withered, before the mania of retail trade increased again. .
Coinbase CEO Brian Armstrong referred to the idea in the note he sent to his employees on the day of the layoffs, which he later posted on the company blog.
“It looks like we are entering a recession after an economic boom of more than 10 years,” he wrote. “A recession could lead to another cryptocurrency winter and could last for a long time.”
As central banks begin to raise rates, investors around the world are feeling the pinch. Credit: NYSE
Gareth MacLeod was one of the people who came out of cryptography last winter. The 35-year-old software engineer from the Toronto area co-founded a cryptocurrency creation company called Tinker in 2014 with the help of the Y Combinator startup accelerator in California. He went up until prices started to fall, then looked around and realized he no longer believed in the mission.
It’s easy to silence any doubts when prices keep rising and investors pile up on your business, MacLeod said.
“I was only able to re-evaluate my relationship with cryptography and the industry because things had gone downhill,” he said. “I’m glad it happened to me.”
Right now, some investors are saying that they are taking a break from online trading, if not that they are moving away completely. Mike Janavey, a 32-year-old from Westchester, New York, who last year was active in the favorite meme trade AMC Entertainment Holdings Inc. and GameStop Corp. said it is focusing more on real-world projects. These include a shoe and clothing design business.
“I wanted to let it rest a bit, make some gains and not let it focus on my real life,” he said.
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Others are switching to more traditional investment platforms. Andy Slye, a 32-year-old from Louisville, Kentucky who works in IT and hosts a popular Tesla-oriented YouTube channel, transferred his portfolio to Robinhood’s Fidelity, which has been criticized for using game-like features for keep users. back. He started using Robinhood after talking about it on Reddit, but he felt he needed something a little bigger.
“Maybe that’s how you age and don’t really need that gamification to invest, knowing it’s more serious than that,” he said.
Bloomberg
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