Crypto winter 2022-This is bitcoin ‘bloodbath’

As a crypto winter 2022 trader based in Abu Dhabi, Jad Fawaz is close to bankruptcy. “I laughed because there’s no need to escalate the situation.”

He quit his real estate job to focus on trading a year ago, but his holdings have plummeted in recent months. The stress has kept him from sleeping for more than a week.

“First I had 40 coins, then 20 coins, then 10 coins, then five coins, and now I’m down to two coins. My last two coins are here, and I will not sell them before I die.”

There is only so much a retail trader or investor can take.

Bitfinex, a crypto winter  exchange where retail investors typically transact, reported Bitcoin balances have fallen to around 2.3 million from 3.1 million in 2020. In self-custody wallets, balances have not grown as rapidly, suggesting more sales than storage.

The analysts at Bitfinex said that a significant number of retail investors are exiting crypto winter 2022  altogether due to discouragement. The situation is not unique to Fawaz.

Investors have endured a brutal year. A 63 percent drop in Bitcoin’s price has coincided with a $1.63 trillion loss in the cryptocurrency market capitalization overall.

FTX exchange hammered away at the market.

Sam Bankman-Fried’s collapse of the FTX exchange hammered away at the market.

Investing in bitcoin lost $10.16 billion in 7 days in November after investors were forced to exit long-term positions, the fourth-largest loss on record.

“The FTX crisis was like a domino, toppling so many companies,” Linda Obi, a crypto investor in the Nigerian city of Lagos who works at the blockchain company Zenith Chain, said.

With a five-year investment horizon, the 38-year-old trades “a bit of everything”, including altcoins and memecoins.

There is a lack of research and a tendency to jump in without doing any research, and that needs to change. A serious discussion is underway about how we can advertise and sanitize the space.”

The story of David and Goliath

Retail crypto investors lose money all the time. Between 2015 and 2022, the Bank of International Settlements (BIS) estimated that 73pc to 81pc of cryptocurrency investors lost money.

Crypto trading has become increasingly difficult as more sophisticated investors, like hedge funds, have entered the market.

“We don’t have inside information, so trading news is difficult,” said Adalberto Rodrigues, 34, an entrepreneur who trades crypto and runs a software company.

Blockchain data analysis showed that the largest holders of bitcoin often sold while smaller holders bought, “leveraging the smaller users at their expense ”.

Crypto winter 2022 for smaller investors

The crypto winter will continue to attract smaller investors, says trader Eloisa Marchesoni, who could not withdraw about $2,000 from FTX.

“Restaurant will suck it up, as usual,” Marchesoni said, speaking from Tulum on Mexico’s Yucatan Peninsula.

Even so, the hefty investor losses following the collapse of FTX could serve as a kickstart for regulation, according to R3 Communications’ Charley Cooper.

“A constituent’s savings or groceries are less likely to be overlooked by hedge funds.