Gigi De Vries, a freelance marketing consultant in Dubai, said on Wednesday “Let me look at the hilarious chart,” as Luna and Terra melted down. The graph on her screen showed her $10,000 investment in Luna had collapsed to $200.
“It’s a lot of money to me, but I also know that I can’t do anything at this point, I just have to laugh. What else can you do?” said De Vries, 30.
Looking back, De Vries says she wished she’d placed a stop-loss order. And looking ahead, she’s set her sights on supposedly safer, “blue-chip’’ coins like Bitcoin and Ethereum. For now, however, she’s stopped looking at her portfolio and calculating losses. She’ll take a peek if, as she believes, prices bounce back.
Five weeks ago, when Bitcoin 2022, a hype-fest of all things cryptocurrency, swaggered into Miami for fun and profit. Among the thousands who turned up there was billionaire Michael Novogratz, who bragged about a tattoo to a rapt audience. It was a wolf howling to the moon – a nod to Luna, the token behind TerraUST, a “stablecoin” that was supposedly safely pegged at $1.
Thirty-odd days later, Luna and Terra have collapsed and their very futures are in doubt. And, from Bitcoin down, a selloff in digital money appears to be accelerating, part of a broader wipeout of more than $200 billion from the cryptocurrency market.
To crypto’s doubters, this looks like a shakeout that’s long overdue, and one that mirrors the wider troubles in financial markets. With stocks down and interest rates up, weak links in crypto are giving way. In peril are parts of a vast, global ecosystem of crypto minters, promoters, traders, exchanges – players who’ve been lured, and lured others, into the crypto universe.
As of late Wednesday, Do Kwon, chief executive officer of Terraform Labs, the developer behind the Terra blockchain, was struggling to line up a rescue. Representatives for Kwon didn’t respond to a request for comment. Representatives for Novogratz didn’t have an immediate comment.
To crypto’s believers, times like this are just part of the game. Many amateur day traders who piled into digital tokens and racy meme stocks during the early days of the pandemic have come to expect wild price swings. Many have even learned to grin and bear losses, waiting for the next surge or shifting their bets to other corners of crypto.
The recent troubles have hit another big player hard. Coinbase Global Inc., the exchange that only 13 months ago became the first major crypto exchange to go public in the US, has been upended too.
CEO Brian Armstrong has watched his personal fortune plunge. As recently as November, his net worth stood at $13.7 billion, following the company’s much ballyhooed initial offering on the Nasdaq Stock Market. Now, after a drastic decline in Coinbase’s share price, Armstrong’s fortune has dwindled to $2.3 billion.
It’s a remarkable turnabout from Bitcoin 2022, just a few weeks ago, when the crypto world gathered to party in Miami.