Small Investors Lose Faith And Savings In Crypto After 'Death Spiral' Sell-Off

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Small players lose faith in crypto after sell-off

Nofe Isah, a 25-year old based in Nigeria, has been investing in crypto since January. Last week, she lost all of her $5,000 in savings as cryptocurrency luna went into free fall.

Isah, a recently unemployed administrative officer, vowed she would never invest in crypto again.

"I can't believe I fell for crypto," she told Reuters by phone. "I'm just trying not to get myself depressed. Crypto has taken my money, fine. It shouldn't take my head.”

The crypto market, known for its wild price swings, slumped last week as investors yanked money from riskier assets amid worries over soaring inflation and rising interest rates.

Bitcoin, the world's largest cryptocurrency, fell as low as $25,401 on Thursday, its lowest since Dec. 2020. It hit a record high of $69,000 in November.

Small tokens were hit too, with ether, the second-largest token, dropping more than 15% to its lowest since June. Luna - a digital coin widely hyped on social media and backed by institutional crypto investors - shed nearly all of its value.

Small traders such as Isah have flocked to cryptocurrencies in the hope of quick returns, despite warnings from regulators that the emerging assets can be high risk.

Platforms such as Robinhood, which has 23 million customers across a variety of assets, have helped spur retail investing, including in crypto. Around a quarter of Robinhood's transaction-based revenues came from cryptocurrencies in the first quarter of this year, Robinhood said in its latest earnings statement.

Overall user numbers at crypto platforms have ballooned. Binance, the world's biggest crypto exchange, had some 118 million clients last month, up from 43.4 million in the first quarter of last year.

But