INFOGRAPHICS. How the Cryptocurrency Industry Collapsed

The cryptocurrency crash has sent shivers down the spine of investors. For several weeks, bitcoin, ether, binance coin or even solana have been plummeting. On June 18, bitcoin even fell below the symbolic $20,000 mark, its lowest level since December 2020, far from the peaks reached in the fall (around $68,000). Like all other markets, cryptocurrencies are directly impacted by inflation, rising key rates, such as those of the US Fed or the European Central Bank (ECB), and the war in Ukraine. Even some stablecoins like TerraUSD (UST) and Tether, whose value is not supposed to fluctuate against their benchmark currency, have temporarily stalled against the US dollar. Which is not to reassure professionals in the sector.

After the bursting of the bubble in 2017, cryptocurrencies, bitcoin in the lead, made a resounding comeback during the health crisis, experts then thought that this improvement would prove to be permanent. This new crash therefore revives the debate on the regulation of a market deemed too volatile. “In the crypto industry, everything is good to attract new customers and keep the bubble growing…until the bubble and the scams burst. Cryptos are financial assets like any other. be subject to the same basic rules of consumer protection (best execution, information, fight against market manipulation) and fight against illegal practices (money laundering, financing of terrorism, scams of all kinds, etc.), recently explained to L’Express Aurore Lalucq, economist and MEP (S&D), member of the Economic and Monetary Committee.

A plummeting market capitalization

The market today feared a collapse with cascading bankruptcies. According to Glassnode, only 2.2% of short-term bitcoin traders are posting gains this year, reports The echoes. In addition to the many investors ruined by this crash, tech employees are also paying the piper. To stay afloat, companies in the sector such as Coinbase Gemini, BlockFi or are laying off en masse, sometimes up to 20% of their workforce. The overall cryptocurrency market capitalization, i.e. the total value of all tokens of a cryptocurrency that have been mined or are in circulation, has indeed also fallen.

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The sling against this blockchain-based technology is gaining momentum. In a letter sent to the US Senate in early June, 1,500 computer scientists, computer engineers and technologists specializing in the sector, thus alerted to “the disasters and externalities linked to blockchain technologies and investments in crypto-assets” arguing that they are ” the inevitable results of a technology that is not meant to be used and that remains forever unsuitable as the foundation of large-scale economic activity”.

When will the fall in prices stop? Expert predictions are highly variable given the economic uncertainty and the lack of long-term historical models. However, this is not the first time that the sector has experienced such a deadline. Bitcoin had already fallen into limbo on the stock market in 2018 (where its price had lost nearly 80%, from $20,000 to just under $4,000), before rising again during the health crisis.

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But unlike 2018, when cryptos were still mostly a niche investment, there are far more investors today. A third of traditional hedge funds (not specialized in the sector) are currently invested in cryptos and a majority of them planned to increase their investments in this asset class this year. The current situation to make them think about.


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