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Retail investors develop a taste for the crypto rollercoaster

Berita 24 English - When Brjánn Bettencourt rolled out of bed on Wednesday morning to discover his cryptocurrency holdings had suffered the...

Berita 24 English
- When Brjánn Bettencourt rolled out of bed on Wednesday morning to discover his cryptocurrency holdings had suffered their worst selloff in years, he knew exactly what to do: add to his position. "Investing in crypto is not for the faint of heart," said Bettencourt, a 32-year-old photographer in Toronto who has been using bitcoin and ether to supplement his stock portfolio for the last year and a half. "I view this as a significant long-term investment."
Cryptocurrencies have been buffeted this week by various factors, ranging from critical tweets by Tesla Inc CEO Elon Musk to Chinese government controls. Bitcoin, the world's largest cryptocurrency, fell as much as 30% before recouping some of its losses. It is down about 40% from the year's highs.

Last week, leveraged positions in bitcoin and ether futures fell precipitously, according to Vanda Research, which tracks retail trades. This indicates that several retail merchants have probably folded their tents. "The (crypto) bubble has begun to burst, and data from various exchanges indicates that retail investors are capitulating," Vanda researchers wrote.

On the other hand, other retail investors have been content to ride out the turbulence or trade around it. "When something like this happens in crypto, people say it shakes out all of the weak hands and the people who bought because they saw it on the news," said Ethan Lou, author of the forthcoming book "Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West." According to Coinbase data, as retail investors piled into cryptocurrencies, bitcoin increased by approximately 345 per cent in the last year, either by 1,219 per cent, and dogecoin by 15,480 per cent. Coinbase, a cryptocurrency exchange, reported that over 56 million users accounted for $335 billion in trading volume in the first quarter, including $120 billion in retail and $215 billion in institutional trading. This compares to $30 billion in total revenue a year ago, the company said, with $12 billion in retail revenue.

Retail interest also swooped in on "meme stocks" such as GameStop this year, driving prices skyward and punishing hedge funds that had shorted the shares. Certain retail investors have embraced wild price swings in the hope of capitalizing on the next big rally. The term "diamond hands" was popularized by users on Reddit's popular WallStreetBets forum. As a shorthand for their willingness to hold an asset through thick and thin, SCRUTINY IS IMPROVED.

Increased mainstream adoption has drawn regulators' attention. ON THURSDAY, the US Treasury Department called for new rules requiring the Internal Revenue Service to report large cryptocurrency transfers. According to the Federal Reserve, cryptocurrencies are a threat to financial stability. China announced on Friday that it will crackdown on bitcoin mining and trading. Throughout their history, cryptocurrencies have been notoriously volatile. Bitcoin fell 94% in 2011 and 82% between late 2017 and 2018, causing many investors to flee. Lily Francis, on the other hand, has attempted to capitalize on the large swings. The 25-year-old, who lives in San Diego and works as a quantitative researcher at a cryptocurrency hedge fund, began trading cryptocurrencies in 2017 but exited before the market crashed. Then, last month, she invested about 1% of her net worth in various cryptocurrencies, capitalizing on a rally she perceived to be fueled in part by social media hype.

When Musk hosted Saturday Night Live on May 8, she liquidated her ether and reduced her bitcoin holdings. She later repurchased 40% of her ether position at a lower price.

Tesla's CEO has flipped-flopped on whether the electric carmaker would accept bitcoin as payment, and his tweets have frequently influenced the price of dogecoin.

"When you see people rushing into markets out of fear of missing out, that is typically a good time to exit," Francis explained.

Doug Liantonio, 31, of Deerfield Beach, Florida, stated that he is the dogecoin and ethereum classic owner. With dogecoin prices down 50% from their all-time highs, he's holding out for a rally before selling. "I'm not sure I'll wait for Elon's rocket PR stunt; that would be too late," he said. Musk recently announced that his company SpaceX will launch a dogecoin-funded rocket to the moon next year.

For Bettencourt, the photographer, cryptocurrency's ups and downs are part of its allure.

Cryptocurrency investing “Reminds me of that terrifying rollercoaster,” he explained. “You're riding it up and down and experiencing every twist and turn, which I find exciting and enjoyable.”

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