People are cashing out of cryptocurrency markets around the world as a result of post-pandemic inflation and cost of living increases.
The market had one of the worst weekends in its brief history, with major coins Bitcoin and Ethereum suffering the most.
Experts say this is a watershed moment for the digital phenomena, and they advise against reinvesting during the present downturn, which might see values drop another 50%.
‘Bitcoin appears to be on the verge of collapsing to $20K, while Ethereum appears to be on the verge of collapsing to $1K. If that happens, the total market cap of roughly 20K digital tokens will fall below $800 billion, down from nearly $3 trillion at its peak,’ said Peter Schiff, Chief Economist and Global Strategist at Europac.
‘Do not purchase this dip. You’re going to lose a lot more cash.’
The recent drop in bitcoin values has thrown many people into dark mental health holes, with some even attempting suicide.
On Saturday, Bitcoin, the most valuable and widely used cryptocurrency, lost more than 8% in a single day.
In the previous seven days, it has dropped roughly 16%, reaching $25,000 for the first time in 18 months.
Ethereum had an even worse weekend, losing about 10% on Saturday and nearly 30% in the previous week.
Overall, it’s been the third-worst cycle for the two coins, following losses of 80% between 2013 and 2015 and crypto’s worst-ever slump in late 2017 and early 2018, when Bitcoin dropped 83 percent and Ethereum dropped a staggering 94 percent.
Mr. Schiff believes that the stock market’s demise is directly linked to increasing inflation and the cost of living, citing US data released on Friday that showed inflation increased by 1% rather than the projected 0.7 percent.
‘With rising food and energy prices, many Bitcoin HODLers will be compelled to sell to make ends meet. Bitcoin is not accepted in grocery stores or gas stations. No one needed to sell when Bitcoin plummeted during Covid,’ the global economist stated.
‘Consumer prices were significantly lower, and HODLers received stimulus payments.’ As the recession worsens and many HODLers lose their jobs, especially those working for soon-to-be-bankrupt blockchain startups, the need to sell Bitcoin to pay the bills will only increase.
‘Long-term buyers without paychecks will be forced to sell if circumstances change.’
HODLers is a crypto slang term that refers to a strategy utilized by buy-and-hold traders as opposed to folks who purchase and sell on every downturn.
Other reasons may have contributed to the meltdown, such as Ethereum’s transition to a more energy-efficient mining mechanism, although most analysts feel it is more tied to common people withdrawing their funds.
Its hemorrhaging became so severe at one point that US$200 million was sold in a single day.
In the last week, nine of the top ten cryptocurrencies have lost at least 3% of their value, with only Cardano seeing an increase.
A lack of regulation, according to David Gerard, an author and crypto expert, has doomed the business, and average Australians will be the victims of the latest crisis.
‘We must consider the genuine victims, the mothers and fathers, the grannies who believe their retirement should be invested in cryptocurrency.’ ‘There’s a real human cost here,’ he told 60 Minutes, referring to the average folks who are duped.
‘You can’t get rich for free. You’d think that was obvious, but people keep hoping there’s a way out and that they’ll get ahead, but it’s always a false hope. Some people do great but more people get absolutely wrecked.’
He said anyone who started investing in crypto in the last six months have instead been sold ‘magic beans’.
‘They’re trying to work out how to offload them. A lot of them are just going to have to take the hit and it’s not going to be nice,’ he said.