Crypto's Onetime Fans Are Calling It Quits
The FTX debacle is the last straw for many who embraced crypto during the pandemic.
prativad
Buying crypto was so much fun when it was going up. Now, many onetime fans are getting out.
This year has brought crisis after crisis, raising questions about the industry’s long-term prospects. Two major lenders, Voyager Digital VYGVQ -1.52%decrease; red down pointing triangle and Celsius Network, filed for bankruptcy this summer. The price of
bitcoin has plunged some 75% from its peak late last year. For some traders, the recent collapse of the crypto exchange FTX—which is dragging down other firms—was the last straw.
Crypto fund asset managers saw investors withdraw almost $20 billion in November, or nearly 15% of total assets under management, according to the research firm CryptoCompare. That brought the fund managers’ collective AUM to its lowest point in nearly
two years. By contrast, many small-time investors continue to stay in the relatively boring stock market, despite losses there as well.
Dennis Drent, a former executive at a pet-insurance company, said he waded into the crypto market last December, when the world felt very different. He was growing anxious that the stock market’s record run would soon sputter and was frustrated by how little his bond investments were generating.
Around that time, he caught an appearance by a bitcoin proponent, Michael Saylor, with Fox News’s Tucker Carlson.
“He had me convinced that you can’t lose,” said Mr. Drent, who lives in Southern California.
A few weeks later, he poured about $25,000 into Grayscale Bitcoin Trust. He even had a nod from his financial adviser, he said.
It didn’t work. Mr. Drent cashed out in May, taking about a 50% loss. By then, crypto prices were falling fast. But so were stocks and bonds, an unusual coupling that reflected broad uncertainty.
Mr. Drent said he should have known to avoid a market that was so lightly regulated and that he didn’t fully understand: “I wasn’t cautious enough.”
