It is no secret that Abu Dhabi-based cryptocurrency dealer Jad Fawaz is on the verge of bankruptcy, he claims. He continued by saying that he is laughing since there is no need in expressing additional dejection and annoyance over it.
The 45-year-old is seeing 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.
For many small-time investors and dealers, enough is enough.
Bitcoin balances on cryptocurrency exchanges, where retail investors frequently interact, have decreased from an all-time peak of 3.1 million in 2020 to roughly 2.3 million, according to exchange Bitfinex. Self-custody wallet holdings have not increased at the same rate, indicating that more money is being sold than stored, it continued.
According to Bitfinex researchers, there are indications that a sizable number of retail traders have been so frustrated that they have given up on cryptocurrencies altogether.
Fawaz is not alone, in fact.
Investors have had a terrible year. While the market capitalization of all cryptocurrencies has shed $1.63 trillion in value, the price of Bitcoin has fallen by 63%.
The market suffered hard by the absconding of Sam Bankman-FTX Fried’s exchange.
Glassnode data claimed a 7-day realised deficit of $10.16 billion in bitcoin trades occurred in November as a result of investors being compelled to sell long-term positions. This deficit makes it the fourth-largest on the list on this metric.
Linda Obi, a cryptocurrency investor who works at blockchain company Zenith Chain in the Nigerian city of Lagos, stated this is no longer the winter season; rather, it is a slaughter since the FTX problem was like a domino that brought down other businesses.
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.
She continued, “There is a common misconception that there is a lot of hype surrounding cryptocurrency, with celebrity endorsement and people’s favourite personalities talking about cryptocurrency.
People tend to leap in without doing any investigation, and this needs to change. Serious discussions are going on about how the industry should clean up and market the area.
Losses by cryptocurrency retail investors are nothing new. Based on a report from the Bank of International Settlements (BIS), 73% to 81% of cryptocurrency investors probably lost money between 2015 and 2022.
As the cryptocurrency asset class grew, more wealthy, skilled investors like hedge funds joined it, making retail trading more challenging.
Adalberto Rodrigues, 34, of Lisbon, who trades cryptocurrencies in addition to owning a software company, claimed that it is extremely hard to trade on the news since people lack inside information and a tweet can alter everything.
Blockchain data analysis, according to BIS experts, revealed that the biggest bitcoin holders frequently sold their holdings while smaller players bought, reaping profits at the expense of the latter.
A trader named Eloisa Marchesoni, who claimed to have roughly $2,000 on FTX that she was forbidden to withdraw, is confident that cryptocurrency would continue to appeal to smaller investors.
Retail will fail, as it usually does, 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, constituents who lost their savings or groceries money are much tougher for politicians to ignore.
