East Africans who had invested in crypto currency are licking their wounds after the price of Bitcoin and other cryptocurrencies plunged Thursday amid a crash in digital assets that has already wiped away $600 billion in market capitalization in just a week.
Bitcoin prices fell 9% over the past 24 hours to around $28,000, having dipped below $26,000 in the trough of volatile trading.
Bitcoin has lost more than a quarter of its value in the past week, and has not consistently traded this low since late 2020.
On Twitter, Jeremiah Karume said he nearly fainted after losing almost $5,000 in crypto investment.
“Last month I sold my car and I wanted to get my money in bank but one of my friends advised me that crypto investment is better and told me to buy Terra luna worth $4200 and hold it for at least one year,” said Karume.
“Yesterday I opened my wallet and I was about to faint,” he added.
BBC reported that crypto-currency markets were being rocked after Terra Luna token fell from a high of $118 (£96), last month, to $0.09 on Thursday.
The collapse had a knock-on effect on a linked token, TerraUSD, which is normally stable.
And spooked investors are now pulling out of major crypto-currencies, sending markets plummeting.
Crypto-currencies are digital assets that are designed to effect electronic payments without the participation of a central authority or intermediary such as a Central Bank or licensed financial institution. Crypto-currencies are used to effect anonymous electronic payments or bought and held for speculative purposes in the expectation that their value will rise at a future time, whereupon they could be sold for a profit.
Hundreds of crypto-currencies have been designed and launched around the world, and the most well-known examples include Bitcoin and Ethereum.
Such crypto-currencies are not issued or regulated by any government or central bank.
Uganda, which does not recognise crypto currency as legal tender, recently warned that most crypto-currencies such as Bitcoin and Ethereum were not backed by assets or government guarantees.
“Therefore holders of these crypto-currencies are fully exposed to the risk of loss or diminishing value as the issuers are not obliged to exchange them for legal currency or other value,” said the Finance Ministry.
The pain was more pronounced in other cryptocurrencies. Ether, the second-largest digital asset, dropped 20% to around $1,900—the lowest levels since July 2021. The token underpinning the Ethereum blockchain network has lost one-third of its value in the past seven days.
It was an even deeper sea of red among altcoins, or smaller tokens. Solana, Cardano,and Avalanche all tumbled 25% to 30%.
Last month I sold my car and I wanted to get my money in bank but one of my friends advised me that crypto investment is better and told me to buy Terra luna worth $4200 and holdfor at least one year
Yesterday I opened my wallet and i was about to faint#LunarCrush #Cryptocrash pic.twitter.com/DmvEEgsMmX
— Sir Jerry (@jeremiahkarume_) May 12, 2022
“Memecoins”—called that because they were initially intended as internet jokes rather than significant blockchain projects—were unspared, with Dogecoin and Shiba Inuboth losing around 25%.
The term “cryptocrash” has been trending on Twitter and Google Search.
And the combined market value of all crypto-currencies is now reportedly $1.12trillion, about a third of its November value, with more than 35% of that loss coming this week.
One Bitcoin is now worth about $27,000, its lowest value since December 2020 and down from a high of nearly $70,000 late last year.
Ethereum, the second largest coin by value, has lost 20% of its value in 24 hours.
“The collapse of TerraUSD has started what we used to call ‘the panics’, when major financial institutions sold off large chunks of assets and everyone else tried to take their money out as quickly as they could,” economist Frances Coppola said.
“Panic is exactly what’s going on here.”
On Wednesday, Do Kwon, the founder of Terraform Labs, the company behind TerraUSD and Terra Luna, tweeted: “I understand the last 72 hours have been extremely tough on all of you – know that I am resolved to work with every one of you to weather this crisis and we will build our way out of this.”
A plan to shore up Terra Luna by creating more tokens was outlined – but having lost large sums, many Twitter users are asking the company to help.
Meanwhile, the company’s Discord server, a platform where investors congregate to talk through issues, posted a notice saying it had been “locked down so new people can’t come in and spread fear, uncertainty, doubt and misinformation”.