Over 340 British crypto companies have folded this year (up from 139 last year) says British news outlet Sky News.
And thanks to bad timing, some inexperienced and over-leveraged crypto investors – members of the general public – have even lost their marriages and homes:
“One man told Sky News he lost his marriage and remortgaged his home after he defaulted on loans he had used to invest in cryptocurrencies.
He said he wished he had never heard of Bitcoin.
He and many other investors and businesses declined to be identified in this article, explaining that they feared mockery from friends and relatives.”
According to Sky News, the investors thought they’d hit upon a sure thing:
“Married men accessed equity through their family homes, and often – whether because they felt they needed to act quickly to make the most money, or because they feared that their investment would be criticised by their spouses – did so without informing their families, only to see the value of their assets evaporate, followed by their homes.”
The price of Bitcoin, and the prices of many other cryptos that tend to track it, rose to unparalleled heights at the end of 2017.
In January of that year, one Bitcoin could be had for around $1000 USD. But by the fall of 2017, FOMO (fear of missing out) proved irresistible to many neophyte traders.
After American Thanksgiving weekend in Novemember, the American exchange Coinbase said it was signing up 10 000 new users a day, and within a month, between mid-November and mid-December 2017, the price of one bitcoin jumped from $8000 USD to $20 000.
Stories of people buying crypto with credit began widely circulating in concert with news reports claiming an imminent avalanche of Wall Street money into the sector, stories pervaded by many crypto hedge fund pundits of some repute.
Those exuberant stories have been replaced this year by numerous false-bottom calls by the same personalities, and by waves of academic and criminal reports claiming widespread market manipulation by seasoned insiders across global crypto markets.
Experienced crypto investors like Hugh Halford-Thompson, a bitcoin dealer who once sold the coins to former British Chancellor of the Exchequer George Osborne, said the influx of neophytes in 2017 concerned him:
“There was a lot of people getting in, and I think for the first time I felt there were a large number of people who really didn’t understand what they were getting into as well…every Uber driver I had either had invested or was thinking about it…I had people asking me genuinely which coin to put their children’s university funds into. That’s not good…I didn’t follow up with them, but I hope they didn’t.”
To Halfold-Thompson, bad timing was a big factor:
“There was a lot of people trying to work out how they can get in four days before the big crash.”
Halford-Thompson had a Bitcoin ATM installed in the trendy London Shoreditch neighbourhood as early as 2013, when the price of Bitcoin spiked from 250 pounds to 1200 (researchers have now linked that surge to possible manipulation as well).
Halford-Thompson believes many of the crypto businesses that folded this year were started by inexperienced entrepreneurs, or people who lack the necessary acumen altogether.
“I saw a lot of companies get involved when the hype was building. There are a lot of issues in that whole sector..What you’ve had since the crash is a clean-out of the companies that don’t really have much and probably shouldn’t have been there in the first place.”