“There is so much fear”: A crypto winter has arrived

Not funny

The slowdown follows nearly two years of boom, which saw Bitcoin soar from below $5,000 in March 2020 to nearly $70,000 in November 2021. This was accompanied by a froth in many other risky asset classes as young people – stuck at home due to the pandemic, with money to burn through stimulus checks and boosted by like-minded people on forums like WallStreetBets from Reddit – resumed trading for the first time. Crypto was a favorite of retail traders, and new concepts like NFTs and DeFi provided stunning returns, at least temporarily.

“With the impending recession and inflation, everyone has this fear and everyone in the crypto market is also reacting to this fear. It’s scary when you’re hanging on for dear life.

Investor Nikole Vicente

The change of mood hasn’t just been in the crypto space, of course. Inflation is at a four-decade high, Wall Street is settling into a bear market, recession fears are growing, and meme stocks that used to be the ‘retail maniac’ are slipping back into the slump in which they once stood. floated around for years before they were rediscovered by bored day traders on Reddit.

This is evident when looking at monthly active users on Robinhood, the gateway investing platform for many new traders, which fell nearly 60% in May from a year earlier, data shows. from Similarweb, which tracks website activity on the Android operating system. The story is similar in most other online brokers.

Julian Barrios, 26, went from $800 a week to less than $100. Eventually, he stopped trading options altogether due to soaring prices.

“It takes the fun out of seeing all the volatility,” the Fort Lauderdale, Fla. mechanic said. “Right now you’re definitely going to be frustrated or stressed. The last two months have been really tough for me.


frustration and stress

Some call it the start of another “crypto winter”. The phrase is most often used to describe the period of stagnation from early 2018 to mid-2020, when prices languished and innovation withered, before retail mania caused everything to jump again.

Coinbase CEO Brian Armstrong referenced the idea in the memo he sent to his employees on the day of the layoffs, and later posted on the company’s blog.

“We appear to be entering a recession after an economic boom of more than 10 years,” he wrote. “A recession could lead to another crypto winter and could last for an extended period.”

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 exited crypto over the past winter. The 35-year-old Toronto-area software engineer co-founded a crypto market-making company called Tinker in 2014 with help from startup accelerator Y Combinator in California. He rode the bull up until prices started crashing, then he looked around and realized he no longer believed in the mission.

It’s easy to shut down any doubts when prices keep rising and investors pile into your startup, MacLeod said.

“I was only able to re-evaluate my relationship with crypto and with the industry because things had gone down,” he said. “I’m glad it happened to me.”

At this point, some investors say they are taking a break from online trading, or even moving away from it altogether. Mike Janavey, a 32-year-old from Westchester, New York, who last year was active in the business of favorites AMC Entertainment Holdings Inc. and GameStop Corp., said he was focusing more on projects in the world real. These include a shoe and apparel manufacturing company.

“I wanted to let him rest for a bit, take some wins and not let him focus on my real life,” he said.


Others are turning 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, moved his wallet to Robinhood’s Fidelity, which has come under fire for using game-like features to bring users back. He started using Robinhood after hearing about it on Reddit, but felt he needed something a little more grown up.

“Maybe it’s a bit like getting older and not really needing that gamification to invest, knowing it’s more serious than that,” he said.


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