Unlike the idealists who drove the initial enthusiasm for Bitcoin in the 2010s, these professional traders are treating the cryptocurrency as part of a larger portfolio of high-risk, high-reward tech investments. Some of them are under pressure to secure short-term returns for clients and are less ideologically committed to Bitcoin’s long-term potential. And when they lose faith in the tech industry more broadly, that affects their Bitcoin trades.
“Five years ago, people who were in crypto were crypto people,” said Mike Boroughs, a founder of the blockchain investment fund Fortis Digital. “Now you’ve got guys who are across the whole span of risk assets. So when they’re getting hit over there, it’s impacting their psychology.”
Worries in the stock market — affected by challenging economic trends, including Russia’s invasion of Ukraine and the historic levels of inflation — have particularly manifested themselves in falling tech stocks this year. Meta, the company formerly known as Facebook, is down more than 40 percent this year. Netflix has lost 70 percent of its value.
On Tuesday, shares of Coinbase, the cryptocurrency exchange, also plummeted more than 10 percent after it reported declining revenue and a loss of $430 million in the first quarter. The company’s stock has fallen more than 75 percent overall this year.
Russia-Ukraine War: Key Developments
On the ground. A Ukrainian counteroffensive near Kharkiv appears to have contributed to sharply reduced Russian shelling in the eastern city. But Moscow’s forces are making advances along other parts of the front line.
The Nasdaq is already in bear-market territory, having ended last week down 26 percent from its mid-November record. Last November was also when Bitcoin’s price hit a peak of nearly $70,000. The crash has been a reality check for Bitcoin evangelists.
“There was this undeniable retail belief that Bitcoin at the end of last year was an inflation hedge — it was a safe haven, it was going to replace the dollar,” said Ed Moya, a cryptocurrency analyst at the trading company OANDA. “And what happened was inflation started to become very ugly, and Bitcoin lost half of its value.”
The prices of other cryptocurrencies have also been crushed. The price of Ether, the second-most valuable cryptocurrency, has dropped about 25 percent just since early April, to under $2,300. Others, like Solana and Cardano, have also experienced precipitous drops this year.