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How over $1 trillion worth of crypto disappeared in just six months


The flight of traders from risky investments has halved the price of bitcoin and other cryptocurrencies, wiping out more than $1 trillion in digital cash since November.

Wild swings are fairly common with cryptocurrencies, but even seasoned investors were shaken as bitcoin fell 29% in a seven-day losing streak that just ended as a stablecoin – a part of the crypto world that touted its stability – unexpectedly crashed.

Investors are watching an inflection point in financial markets as interest rates rise and inflation rages, and they are responding by selling risky assets.

For crypto, it has been a volatile journey into the depths.

Last year, cryptocurrencies were on fire and seemed to be gaining legitimacy after years of being considered a fringe and speculative commodity. You’re here Inc.

TSLA 5.71%

said it bought $1.5 billion worth of bitcoins, driving prices up. Coinbase global Inc.

PIECE OF MONEY 16.02%

listed its shares in the first major bitcoin-focused public offering.

In November, bitcoin and ethereum, two of the most popular cryptocurrencies, hit all-time highs. The value of Bitcoin at 5 p.m. on November 9 was $67,802.30; Ethereum was worth $4,800. They are now down 58% and 60%, respectively, from those levels.

Sources: CoinDesk (bitcoin); Kraken (ethereum, dogecoin); CoinMarketCap (Shiba Inu)

How over $1 trillion worth of crypto disappeared in just six months

Sources: CoinDesk (bitcoin); Kraken (ethereum, dogecoin); CoinMarketCap (Shiba Inu)

How over $1 trillion worth of crypto disappeared in just six months

Sources: CoinDesk (bitcoin); Kraken (ethereum, dogecoin); CoinMarketCap (Shiba Inu)

How over $1 trillion worth of crypto disappeared in just six months

Sources: CoinDesk (bitcoin); Kraken (ethereum, dogecoin); CoinMarketCap (Shiba Inu)

How over $1 trillion worth of crypto disappeared in just six months

Sources: CoinDesk (bitcoin); Kraken (ethereum, dogecoin); CoinMarketCap (Shiba Inu)

Cryptocurrencies were falling even before last week, victims of sky-high inflation. Bitcoin and other digital currencies have been talked about as inflation hedges. But the ripple effect played out differently. Soaring inflation is prompting the Federal Reserve to raise interest rates faster, which investors believe will lead to slower economic growth. Result: Investors offload risky assets, including cryptocurrencies.

Also compounding the losses is that crypto trading, originally an individual investor game, is now dominated by institutional investors such as hedge funds. Those who sought diversification into crypto were caught off guard.

As the price fell, individual and institutional investors pulled out. When Coinbase released its first quarter results on Tuesday evening, it revealed that it was hemorrhaging users. By the end of Thursday’s session, Coinbase shares were 82% below their closing level after its first day of trading just over a year ago.

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Write to Peter Santilli at [email protected] and Corrie Driebusch at [email protected]

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