“The crypto sector has lost its innocence”: individuals in turmoil

“It’s like in the casino, it’s very hard to stop playing”. Olivier, 27, works in the banking sector. He took his first steps into cryptocurrencies in 2017 and upped his ante during the Covid crisis: “I felt like they were going to fly away.” After breaking his savings account, he buys 4,000 euros worth of cryptos and invests 15,000 more in products linked to this new digital currency. “In a few months I’ve doubled my bet. It’s exciting, you feel superhuman, smarter than the market.” However, the bargain hunt encourages people to go for increasingly risky products, the young executive admits. “I didn’t have the intelligence to leave with my winnings. I lost 17,000 euros there,” he confides disillusioned.

In full euphoria last fall, the market has since plummeted. The crypto star, bitcoin, has lost 40% of its value in six months; the first challenger, ether, fell by 55%, and some cryptocurrencies, such as luna, saw their value nearly evaporate. Olivier is by no means the only one to experience these crazy roller coasters. Because in ten years, the number of crypto investors has grown and their profile has diversified greatly. Long the playground of a few insider technophiles, cryptocurrencies have gradually attracted star entrepreneurs from Silicon Valley (Jack Dorsey, Elon Musk…), traditional financial institutions (BlackRock, JP Morgan…), and then the general public. Already 8% of the French have invested in cryptos or NFTs, according to a survey by Adan/KPMG, more than those who own shares of their own.

When they jump into the “Matrix”, these little bearers are immersed in a strange and colorful El Dorado. Image of monkeys, punk, retro game metaverse, the crypto world was born among geeks, and it shows. “It’s like being in a manga or a comic strip. It appeals to a lot of young people who found finance like an old-fashioned father,” explains Alexandre Baradez, financial analyst at the brokerage firm IG France. This mysterious world has its jargon and its codes: we talk aboutairdrop and from burning, we post memes about whales (the crypto realms) or bears (with reference to the bear market, bear market).

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This ultra-connected community offers everyone devilishly simple tools to trade. With a few clicks on your smartphone, you can buy, sell and, above all, monitor the fluctuations of your portfolio. “It’s extremely addictive, you look at your phone all the time. The values ​​can triple in one day, it’s an adrenaline rush,” says Paul*, a young entrepreneur from Lille. Tools that do little to keep a cool head, because they constantly shine the spotlight on missed “good deals”. “I bought $20,000 worth of crypto in the early days of bitcoin when it was still worth $200. When it went to $450 I sold at a big profit, but if I had waited until the end of 2017 I would have won almost $2 million Euros. I admit that I have difficulty processing this story,” confides Jean-Marc, a 50-year-old entrepreneur who recently also had almost 80,000 euros in the pot.

“We learn from pain”

In the crypto world, individuals must navigate an eccentric fauna where ardent utopians shrug off petty thieves and seasoned con artists, Florent*, 30, confirms. They come to explore the barge on Instagram or TikTok, dangling golden pipes or tokens that promised a dazzling success…

If you don’t fall for these tricks, you will soon run into another difficulty: the crypto market is very complex to understand. A lot of stable coins for example, have given internet users a false sense of security by playing on the idea that behind every corner was $1 reserve, when the mechanisms are actually much more complex than that.

Developer Arnaud* systematically immerses himself in white papers in which he describes the functioning of the blockchains in relation to the cryptos in which he invests. “Of the 10 projects launched, 9 crash. We are learning little by little – and often with pain – to evaluate them and understand market cycles.” When everyone is afraid, buy, when euphoria, then sell, the saying goes. “I’m making some progress, but I’m still useless. trade‘ he says modestly.

“Even if you know the financial markets well, it’s not easy,” reassures Alexandre Baradez, an analyst at IG France. This is all the more true because many foreign platforms are not obliged to inform their customers about the risks of their products. “For example, leverage has greatly exposed people who have ventured into it,” the expert analyzes. The promise of this mechanism is tempting: you bet more than what you own. “With EUR 1,000 and leverage x 100, you can invest EUR 100,000,” Alexandre Baradez illustrates. But of course there is also a downside. “If the market registers a small drop, say 1% on a leverage x 100, your positions are automatically cut off and you have already lost your $1,000. And that happens very often,” explains the analyst.

These particularities explain why certain small airlines find themselves in delicate situations today. “Many members have incurred losses of 40 to 60%, confides Hermès, a youtuber who has built a community of 20,000 people around his channel Les Rois du bitcoin. In general, these are neophytes who arrived with one idea. : to maximize profits in short time, leading to human tragedies.” Gérard, a 50-year-old Parisian eager to diversify his investments, saw the value of his crypto investments halve: “My 30,000 euros invested mainly in bitcoin and ether is now worth around 17,000, so I’ve lost quite a bit .”

“We are at the mercy of major investors who coordinate”

The situation is even more unpleasant for those who have ventured into exotic projects such as the Luna, who broke his face. “A lot of people bought to ruin and burned their fingers,” says the Hermès YouTuber. In addition to economic losses, there is also a certain disillusionment in the community. Many crypto apostles saw it as a shield against inflation. For them, the hangover is painful. “They saw that the sector was just as affected, if not more so, by the rate hikes that were decided to counteract the fall in prices,” deciphered Alexandre Baradez.

The arrival of traditional financial players on their playground also makes many people bitter. “The sector has lost its magic and its innocence,” said Paul, the 30-year-old from Lille. It must be said that these heavyweights have incomparably more sophisticated means of predicting and profiting from price movements. “We are at the mercy of a group of large investors who are coordinating to raise a cryptocurrency that is developing in a thin market, before pulling out abruptly, making a significant profit in the process and setting off a general panic that is disastrous for most. modest,” notes. Nicolas, a 30-year-old engineer.

However, many small porters remain surprisingly stoic in the storm. “We’re at a stage where projects that aren’t strong enough will die, it’s unpleasant, but the technology itself retains its full potential,” says Paul. After going through a phase of trade delirious, the young entrepreneur, like many of his comrades, joined the “community of” hodlers“, (from HODL crypto slang, for hold on for dear life), who decide not to touch their crypto for years, and bet on the very long term. It is true that more and more of them have already experienced previous crypto crashes, especially the one of 2018. This is not their first rodeo.

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*Names have been changed.


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