Crypto Currency Flash Crash Has Investors Spooked

Crypto Crash - Photo by Raphael Wild on Unsplash

Cryptocurrencies Melt Down in a ‘Perfect Storm’ of Fear and Panic – The New York Times

Crypto investors panicked on Thursday as bitcoin plummeted to its lowest price in more than a year and other cryptocurrencies endured even worse sell-offs.

Bitcoin, Ethereum, and Solana are all in freefall, with bitcoin worth around $28,300 on Thursday. Ethereum is around $1,800 and Solana around $50.

The cryptocurrency market has lost more than half of its value since November 2021.

Cryptocurrency prices have dropped in the past, but investors have bought the dip when prices were low. Now the threat of recession has investors wary. The likely cohort of crypto speculators are low on cash they need for basics like food, energy, and rent.

Prominent crypto critics include JPMorgan Chase boss Jamie Dimon, billionaire Berkshire Hathaway executives Warren Buffett and Charlie Munger, and Wall Street executives who have poured money into buzzy tech stocks. Those stocks have taken a beating along with bitcoin. In some cases just like they more illusive counter parts losing nearly 80% of their value since the peak of the stock market in December 2021.

The fall in cryptocurrencies could curb spending and national GDPs. The value of digital artwork called “non-fungible tokens” (NFT’s) increased along with cryptocurrency. This market has also cooled off in a dramatic fashion.

Crypto currencies plunge is likely to scare off some retail investors, but potentially entice new buyers who missed the last two runs.

Related: Coinbase warned customers that their cryptocurrency holdings could be at risk if the company were to ever file for bankruptcy protection. This disclaimer is fairly standard in the quarterly filings of public companies but was not included in prior filings of publicly traded Coinbase (COIN).

Brian Armstrong, CEO of Coinbase, took to Twitter defending his company after the release saying there was “zero chance” they were going bankrupt.  The stock of Coinbase had back to back wild sessions in trading on the Nasdaq moving as much as 27% in both directions multiple times.

For other coverage of this story see these sources:

  1. Cryptocurrencies Melt Down in a ‘Perfect Storm’ of Fear and Panic  The New York Times
  2. Crypto investors panic during market bloodbath: ‘I will lose my home’  New York Post
  3. Billionaire Sam Bankman-Fried has lost half his net worth in 2022 but he says the crypto market isn’t going to zero and will recover with stocks: ‘Crypto markets have mostly stabilized’  Yahoo Finance
  4. What happens in crypto may not stay in crypto this time around  Financial Times
  5. Crypto Is the New Dot-Com Bust. Could It Also Be the New Crisis?  Bloomberg
  6. View Full Coverage on Google News
John Nightbridge is a veteran reporter, researcher, and economic policy major from UCLA. Passionate about world issues and potential ways to solve them is a significant focus of his work. Writing freelance and reading the news are John's passions at work. Outside of work, it's all about sky diving, surfing, and stock market modeling.