BUBBLE BURSTS! Cryptocurrencies are crashing into oblivion
Digital investors lose fortunes as Ethereum sheds 20% of its value in 24 hours, Luna drops NINETY-EIGHT per cent and Coinbase warns customers may lose ALL their money.
The world’s second largest cryptocurrency Ethereum has joined the crash – plummeting in value by 20 per cent over the last 24 hours – in the digital downturn that is hammering investors who bought during the Covid years.
Cryptocurrencies are a form of digital money that use mathematics to create a unique piece of code that customers invest in.
Bitcoin was the original digital currency started in 2009 to bypass central banks, and an increasing number of offshoot currencies have been founded in recent years as well as digital art called non-fungible tokens.
They have all been sharply decreasing in value over the past few days including one currency that has lost 98% of its value as fears for the global economy spread and investors start to sell off risky assets.
More than $200billion has been wiped off the cryptocurrency market today alone.
However investors in more traditional stocks are also hurting, with US tech stocks also plunging in recent weeks including Amazon which has fallen 30 per cent in a month.
The FTSE 100 was down 2.5 per cent this morning after official figures showed the UK economy growing slower than expected in the first quarter – and going into reverse in the final month and 2 per cent, respectively.
Many amateur investors took to buying stocks and digital currencies during the Covid pandemic and made money because values were generally rising in a so-called bear market.
Ethereum has now lost more than half of its value this year, Bitcoin has shed a third of its value since January and Luna with 98 per cent of its value wiped out overnight with suicide hotlines pinned to the currency’s Reddit page as a result.
Popular digital currency exchange Coinbase warned users could lose all of their money if the company goes bankrupt – after the downturn led to a 27 per cent fall in its share price.
During the pandemic, record low interest rates intending to boost economies led to investors buying riskier assets like cryptocurrency with higher rates of return.
As skyrocketing inflation leads to a rise in interest rates in order to safeguard savings, these assets are being sold in favour of safer government bonds – which will provide better returns.
Courtesy: Mail & Agency Reports