Crypto values plummet, young investors re-think investments

Business

(NewsNation) — More than $1 trillion was wiped out of the cryptocurrency market as crypto values plummeted in the last week.

Crypto heavy hitters such as Bitcoin and Ethereum have reached lows not seen since 2020. Bitcoin dropped below $26,000 and Ethereum dipped below $1,750 overnight.

Treasury Secretary Janet Yellen issued new calls for regulation of the crypto market on Thursday.

“We really need a regulatory framework to guard against the risks,” Yellen said. “Really, we need a comprehensive framework so that there are no gaps in the regulation.”

Stable coins, a form of cryptocurrency tied to a specific value, usually the dollar or another currency such as gold or silver, showed their volatility this week.

The stock market has also taken downturns this year and typically the crypto market rises slightly above it and falls slightly lower. Crypto is generally more volatile than the stock market and this week’s plummet is an introduction to that for many new investors.

“A lot of people who have entered into this space over the past couple of years, in this massive explosion of cryptocurrency assets and values, are now starting to see the other side of that,” said Sylvan Lane, a financial reporter for The Hill.”

Treasury Secretary Janet Yellen testifies during a House Committee on Financial Services hearing on the Annual Report of the Financial Stability Oversight Council, Thursday, May 12, 2022 on Capitol Hill in Washington. (Graeme Jennings/Pool photo via AP)

The Federal Reserve released a report Monday that showed stable coins are particularly vulnerable to runs.

Young crypto investors are beginning to re-assess their stake in crypto investments.

Oladapo Odedeyi, a microbiology student, has been investing in crypto for five years, buying and selling it for some profit.

He was one of many who recently lost money on a coin called Luna, which became almost worthless this week after having been one of the 10 most valuable crypto coins.

Luna’s massive drop was sparked by an algorithmic coin called Terra-USD losing its peg to the U.S. dollar, causing its sister coin Luna to plummet in value. This allows investors to game the market.

“I checked my wallet and (saw) it dropped down drastically,” Odedeyi said. “I can’t even sell it out because … I don’t know, I’m just like, I’m losing everything.”

He owned 1,000 Luna coins, worth about $8,000, when the value tanked. He watched his wallet go from $8,000 to $20, just like that.

Luna had lost 99% of its value in a blink.

“It’s crypto. You can’t do anything about it,” Odedeyi said.

He is going to keep investing in crypto despite his massive losses on Luna coin, but with a heightened sense of scrutiny.

“I will just try and be more careful and whenever I see a fluctuation, just sell off immediately,” Odedeyi said.

The Associated Press contributed to this report

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