Crypto Winter Persists: Bitcoin Plunges Below $27,000, Crypto Billionaires Suffer Huge Wealth LossesBitcoin's downward trend continues. After breaking below $30,000 on May 10, it dropped below $27,000 during trading on May 12, hitting a new low for the year
Crypto Winter Persists: Bitcoin Plunges Below $27,000, Crypto Billionaires Suffer Huge Wealth Losses
Bitcoin's downward trend continues. After breaking below $30,000 on May 10, it dropped below $27,000 during trading on May 12, hitting a new low for the year. Other cryptocurrencies, including Ethereum, have also struggled. As of this writing, Bitcoin is trading at $26,628.17, and Ethereum is at $1,784.46. The sharp decline in cryptocurrencies has not only hit the revenue of cryptocurrency platforms but also led to significant losses in the personal wealth of crypto billionaires.
Bitcoin has fallen over 45% since the beginning of the year, currently ranking last among major global asset classes. According to Coindesk data, Bitcoin dropped 13.4% in the past 24 hours, reaching a low of $26,482.15. Ethereum has fallen 22.17% in the past 24 hours, hitting a low of $1,773.16. The Financial Times, citing data from CryptoCompare, reported that the total market capitalization of the top 500 digital currencies has been halved from its all-time high of $1.6 trillion in November 2021.
The continued decline in the cryptocurrency market is primarily attributed to macroeconomic influences and tightening regulatory policies.
First, the US CPI for April (up 8.3% year-over-year) remains at a near 40-year high and exceeded market expectations, suggesting that the Fed will accelerate its pace of rate hikes and balance sheet reduction. This has led to a decline in financial markets, with the cryptocurrency market, representing emerging industries, taking the brunt of the impact. This is because the market generally perceives cryptocurrencies as carrying higher risk than traditional industries.
Second, various countries, in an effort to maintain their financial sovereignty, are increasingly imposing restrictions on cryptocurrencies or excluding them from the formal financial system. This has also contributed to the continuous decline in the value of cryptocurrencies.
The downturn in the cryptocurrency market has also impacted cryptocurrency platforms and crypto billionaires.
Coinbase, the largest cryptocurrency exchange in the US, released its Q1 2022 financial report, showing a 27% year-over-year and 53.2% quarter-over-quarter decline in revenue. Following the release of the earnings report, Coinbase closed at $53.72 per share, down 85% from its peak in November last year. MicroStrategy, the publicly-traded company with the largest Bitcoin holdings globally, closed at $168.20 per share on Wednesday, down over 70% year-to-date.
The fortunes of crypto billionaires have also dwindled with the plummeting cryptocurrency market.
According to the Bloomberg Billionaires Index, Brian Armstrong, founder of Coinbase, had a net worth of $13.7 billion in November last year. As of now, his wealth has evaporated by approximately 83%, declining to $2.3 billion. Changpeng Zhao, CEO of Binance, has seen his personal wealth shrink from $96 billion in January to $11.6 billion on May 11, a decline of almost 90%.
Michael Novogratz, CEO of crypto merchant bank GalaxyDigital, has seen his net worth fall from $8.5 billion in early November last year to $2.5 billion. Tyler and Cameron Winklevoss, co-founders of Gemini, have each lost about $2.2 billion in wealth this year, a decline of about 40%. Sam Bankman-Fried, CEO of another cryptocurrency exchange FTX, has also seen his wealth cut in half since late March, to around $11.3 billion.
Whether the cryptocurrency market can emerge from this winter and its future trajectory remain to be seen. It is foreseeable that the cryptocurrency market will face more challenges due to changing macroeconomic conditions and regulatory adjustments, and investment risks will increase accordingly.
Data sources: Coindesk, CryptoCompare, Bloomberg Billionaires Index, Daily Economic News
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