By Harry Mottram: Reuters have reported that Coinbase have laid off 950 workers as the market for cryptocurrencies suffers problems following the FTX scandal which lost investors millions of pounds. But last year before the scandal broke Bitcoin saw its value fall from around £30K in 2021 to about £9K in November last year according to NBC News.
The FTX scandal in which investors cash was funnelled illegally by the former founder Sam Bankman-Fried into politicians, property and sister companies has spooked the cryptocurrency industry. Forbes reported this month: “Ethereum (ETH) prices dropped another 1.4% in December to close out the year at $1,199. Bitcoin prices dropped nearly 65% in 2022, its worst annual performance since its 73% decline in 2018. Ethereum prices dropped 67.7% in 2022.
“Rising interest rates triggered crypto winter in 2022, producing a wave of bankruptcies in the crypto industry and sending the prices of most popular cryptocurrencies tumbling. Among the 10 largest cryptocurrencies by market capitalization, Tron (TRON) was the best performer with a 27% decline. Polkadot (DOT) took the hardest hit with an 83.6% price decline on the year.
“The total market capitalization of the global cryptocurrency market peaked at over $2.9 trillion in November 2021. As of the end of 2022, that market cap now stands at just $798 billion.”
Those figures speak for themselves and it is no surprise with millions of pounds of investors cash lost in 2022 there are growing calls on both sides of the Atlantic for regulation of the ‘Wild West’ industry. That is something that may well happen in the coming years but in the mean time the industry’s champions are talking up cryptocurrencies as they point to the huge swings in value in the past. Typical is Sandra Ro, CEO of the Global Blockchain Business Council, who was reported by website Coin desk as saying: “Regroup with humility, rebuild with integrity, regain trust, rise again.”
Ian Carrotte of ICSM said that nobody should invest more than they can afford to lose in cryptocurrencies and he likened it to gambling by saying it should be a speculative hobby and not a way to earn money. “It’s an old phrase,” said Ian Carrotte, “but if something is too good to be true then it isn’t. What Bankman-Fried was promising investors was fantasy stuff – get rich quick. Some say it was a Ponzi scheme – but it’s a essentially an old fashioned fraud using the latest technology.”
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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com