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

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“It’s like in the casino, it’s very difficult to stop playing.” Olivier, 27, works in the banking sector. He took his first steps in cryptocurrencies in 2017 and increased his participation during the Covid crisis: “I had a feeling they were about to fly away.” After breaking his savings account, he buys € 4,000 worth of cryptocurrencies and invests another € 15,000 in products related to these new digital currencies. “In a few months, I have doubled my bet. It’s exhilarating, you feel superhuman, smarter than the market.” Bargain hunting, however, encourages people to focus on increasingly risky products, acknowledges the young executive. “I didn’t have the intelligence to start with my winnings. There I lost 17,000 euros”, he confides disillusioned.

In full euphoria last fall, the market has since collapsed. The crypto star, bitcoin, lost 40% of its value in six months; its first challenger, ether, dropped 55% and some cryptocurrencies, such as luna, have seen their value almost evaporate. Olivier is far from the only one to experience this crazy roller coaster. Because, in ten years, the number of cryptocurrency investors has grown and their profile has significantly diversified. For a long time the playground of a few insider technophiles, cryptocurrencies have gradually attracted prominent entrepreneurs from Silicon Valley (Jack Dorsey, Elon Musk …), traditional financial institutions (BlackRock, JP Morgan …), then the general public. . Already 8% of French people have invested in cryptocurrencies or NFTs, reveals an Adan / KPMG study, more than those who own their own shares.

When they jump into the “Matrix”, these little bearers find themselves immersed in a strange and colorful El Dorado. Image of monkeys, punks, retro gaming metaverse, the world of cryptocurrencies was born among the fanatics and it shows. “It’s like being in a manga or a comic. It really attracts young people who have found finance an old-fashioned dad,” explains Alexandre Baradez, a financial analyst at brokerage firm IG France. This mysterious world has its own jargon and codes: let’s talk about itairplane launch and of burning up, we post memes about whales (the crypto-rich) or bears (referring to the bear market, bear market).

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This ultra-connected community offers everyone devilishly simple tools for trading. With a few clicks on your smartphone you can buy, sell and above all follow the fluctuations of your portfolio. “It’s extremely addicting, you always check your phone. The values ​​can triple in one day, it’s hellish adrenaline,” says Paul *, a young entrepreneur from Lille. Tools that do little to keep calm, because they constantly put the spotlight on missed “good deals”. “I bought $ 20,000 worth of cryptocurrencies in the early days of bitcoin, when it was still worth $ 200. When it hit $ 450, I sold with a big upside, but if I had waited until the end of 2017, I would have won nearly 2 million. euro. I admit that I have difficulty digesting this story “, confides Jean-Marc, a 50-year-old entrepreneur who has also recently returned to put almost 80,000 euros into the pot.

“we learn in pain”

In the cryptocurrency sphere, individuals must navigate an eccentric fauna where fervent utopians clash with petty thieves and expert scammers, confirms Florent *, 30. They come to probe the barge on Instagram or TikTok, dangle gold pipes or promised tokens for smashing success … then spin the money in their pocket as soon as possible.

Those who do not fall into these tricks quickly run into another difficulty: the cryptocurrency market is very complex to understand. Lot of stable coins they have, for example, given Internet users a false sense of security by playing on the idea behind everything angle it was a $ 1 reserve, when the mechanics are actually much more complex than that.

Developer Arnaud * systematically dives into white papers detailing how blockchains associated with the cryptocurrencies it invests in work. “Of 10 projects launched, 9 get stuck. We learn little by little – and often with pain – to evaluate them and understand the market cycles”. When everyone is afraid, buy, when euphoria reigns, sell, the saying goes. “I’m making little progress, but I’m still useless. business“, He says humbly.

“Even when you know the financial markets well, it’s not easy,” reassures Alexandre Baradez, analyst at IG France. This is all the more true as many foreign platforms are not required to inform their customers about the risks of their products. “The leverage effects, for example, have exposed a lot of people who have ventured into it”, analyzes the expert. The promise of this mechanism is tempting: you bet more than you have. “With € 1,000 and leverage x 100, you can invest € 100,000,” explains Alexandre Baradez. But there is obviously a downside. “If the market registers a small decline, for example 1% on a leverage x 100, your positions are automatically cut and you lose all your € 1,000. And this happens very often,” explains the analyst.

These peculiarities explain why certain small vectors are today in delicate situations. “Many members have made losses of 40 to 60%, confides Hermès, a youtuber who has built a community of 20,000 people around his Les Rois du bitcoin channel. Typically these are newbies who came with a single idea. .: making maximum profits in a short time, which leads to human tragedies “. Eager to diversify his investments, Gérard, a 50-year-old Parisian, saw the value of his cryptocurrency investments halve: “My 30,000 euros invested mainly in bitcoin and ether are now worth around 17,000, so I’ve lost quite a bit.” .

“We are at the mercy of large coordinating investors”

The situation is even more unfortunate for those who have ventured into exotic projects like the Moon, which broke its face. “A lot of people bought to ruin and burned their fingers,” says the Hermès youtuber. Beyond the economic losses, there is also a certain disenchantment 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 affected just as, if not more, by the rate hikes decided to fight the price slippage,” explains Alexandre Baradez.

The arrival of traditional financial actors on their playground is also making many people love. “The sector has lost its magic and its innocence,” judges Paul, the 30-year-old from Lille. It must be said that these heavyweights have incomparably more sophisticated means of predicting price movements and taking advantage of them. “We are at the mercy of a group of large investors coordinating to raise an evolving crypto in a thin market, before retreating abruptly, making a substantial gain in the process and triggering a general panic that is ruinous for the more modest,” he notes. Nicolas, a 30-year-old engineer.

Many small porters, however, remain surprisingly stoic in the storm. “We are in a phase where projects that aren’t strong enough will die, it’s unfortunate, but the technology itself retains its full potential,” says Paul. After going through a phase of business frantic, the young entrepreneur, like many of his companions, becomes part of the “community of hodler“, (from the cryptographic jargon HODL, for hold on for dear life), who decide not to touch their cryptocurrencies for years and bet for the very long term. It is true that more and more of them have already experienced previous crypto crashes, especially that of 2018. This is not their first rodeo.

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* Names have been changed.


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