Cryptocurrency broke: ‘I hate myself for thinking…that becoming a millionaire was easy’

Illustration of the price drop of bitcoin on June 18

Bitcoin at its lowest, the market collapses, layoffs in start-ups in the sector, the state of El Salvador in the red… The whole sphere of “cryptos” is suffering from a real crash.
“Last week my loss was more than 800 euros, I don’t dare to look at that anymore…”, confides Wael, 20, half amused and half worried. Last year, he invested in the UOS cryptocurrency, created by the Ultra company and backed by video game giant Ubisoft. This delivery man from the Paris region does not hide it: he started with profit, hoping to “make easy money”, nevertheless with some measure. He didn’t put all his savings, just a nest egg of 1,200 euros, with the idea of ​​”getting on the crypto train before he left”. But he has now lost most of his stake, caught in the whirlwind of a collapse in the value of crypto assets, like many investors. Last November, bitcoin peaked at nearly $69,000. Today it is worth less than 20,000. A free fall of -70% for the queen of cryptocurrencies. And the correction is even more severe for thousands of other cryptos, some of which have gone bankrupt.
In recent years, bitcoin’s rise in value, fueled by self-interested speculators, has led those interested in the subject to a kind of absolute faith in cryptography, as if the technology was the (liberal) answer to many economic questions. Aside from the collapse of the entire sector, twice as fast as the Nasdaq, the tech stock amid a period of inflation has called faith and security into question. For the economist Marc Touati, chairman of the ACDEFI cabinet, the mass is said:
“We have just seen the crypto bubble burst. Unfortunately, as with other speculative bubbles, most of the small investors arrived just before the collapse and they are the ones who will lose the most”.
But that didn’t make those who put their money in lines of computer code doubt. Like Clément Vannier, 23, just graduated and who registered a correction “between 5,000 and 6,000 euros” on his investments in bitcoin and Ethereum. Despite this, this fine connoisseur of cryptos puts it into perspective: “Don’t panic. I strongly believed in these technologies and I still do. It’s a very volatile and unstable environment and as long as we haven’t sold, we didn’t lose.”
However, there are a few rare smaller carriers that are more overwhelmed. Like Daniel, a young Englishman who shares his dismay on YouTube: “Everyone said that bitcoin would easily exceed 100,000 dollars, so even buying it at 50,000, I was confident. I invested $7,000 in bitcoins and today it worth half as much…I’m sorry for believing everyone who said it was easy to become a millionaire with cryptos.”.
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The case of El Salvador

The pill is even harder to swallow for people in El Salvador. Under the impetus of its young president, Nayib Bukele, the country has made bitcoin its official currency with a dual ambition. First, to free us from the US dollar, which replaced the local currency twenty years ago, while proposing to save bank commissions on remittances from Salvadorans working abroad (funds that weigh heavily on almost a quarter of GDP).
But in addition to this momentum, Bukele has also decided to convert more than $105 million of the country’s monetary reserve into bitcoins. Amount that has since lost more than half of its value, amounting to $48 million. Not to mention that this entire implementation as legal tender cost about $425 million. But Bukele continues to believe it, indicating on Twitter.
Except that his financial venture raises serious concerns. JPMorgan Bank and the International Monetary Fund (IMF) have warned that El Salvador is “on an unsustainable path”, with very large financing needs and an exploding public debt. So much so that the Fitch Ratings agency downgraded the country’s rating and the insurance contracts covering a possible payment default saw their level increase by more than 300%.


The G20 watchdog proposes the first global rules for cryptocurrency in October

The Financial Stability Board (FSB) said on Monday it would propose ‘robust’ global rules for cryptocurrencies in October, after recent market turmoil highlighted the need to regulate the ‘speculative’ sector. .
The FSB, a body made up of regulators, financial authorities and central bankers from the Group of 20 economies (G20), has so far limited itself to monitoring the cryptocurrency industry, saying it poses no systemic risk.
But recent turmoil in crypto markets has highlighted their volatility, structural vulnerabilities and growing ties to the wider financial system, the FSB said.
“The failure of a market participant, in addition to imposing potentially large losses on investors and threatening market confidence as a result of the crystallization of behavioral risks, can also quickly transfer risks to other parts of the market ‘crypto-asset ecosystem,'” the FSB said in a statement.
The value of bitcoin, the largest cryptocurrency, has fallen about 70% from its all-time high of $69,000 in November and traded at $20,422 on Monday, leaving many investors with losses.
The TerraUSD stablecoin crashed earlier this year, and withdrawals and transfers from major cryptocurrency firms Celsius Network and Voyager Digital rattled the markets.
Stablecoins should be subject to robust regulation if they are to be used as a means of payment, the FSB said.
The FSB has no legislative powers, but its members undertake to apply its regulatory principles in their own jurisdictions. The watchdog lags behind the EU, a major FSB member, which this month agreed to sweeping new rules for the cryptocurrency market. The FSB said cryptocurrencies are primarily used for “speculative purposes” but do not operate in a “regulation-free space” and must comply with relevant existing rules. Many countries require cryptocurrency companies to have anti-money laundering controls.o
Source: © Zonebourse
with Reuters 2022

Issue number: 448

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