London (AFP) – Nick was enjoying his Saturday off work in Pennsylvania when he received an unexpected and alarming message: cryptocurrencies, buoyed since Donald Trump’s November 5 election win, were in freefall. The crash immediately wiped out tens of thousands of dollars from his savings. “I clicked on it and watched it for like a minute just drop straight down,” the 28-year-old American construction worker, who asked for anonymity because of sensitivities around investing in crypto assets, told AFP. “I was like, ‘Well, I guess I should stop looking at it now’,” he added with a laugh.
Crypto investors like Nick are being buffeted by Trump’s vow to make the United States the “crypto capital of the planet” while at the same time upending trade and other policy areas with a raft of executive orders and announcements. Digital currencies are now seeing sudden fluctuations that are impacting legions of both small and large investors. Last weekend, cryptos suffered a meltdown after Trump announced impending trade tariffs on US imports from Canada, China and Mexico, prompting investors to turn to safer assets. The value of Bitcoin, by far the most important crypto which has broken record after record and gained around 50 percent since Trump’s election, dropped six percent at the height of the crash.
Ether, another blockchain currency considered credible, fell around a quarter. The falls have been more dramatic for so-called “meme coins” — cheap and highly volatile cryptos with little or no economic use, themed around a celebrity or viral internet phenomenon. In the space of a few hours, Nick lost around $60,000 from the $150,000 he had accumulated over five years in his virtual wallets. Most of his holdings were in Dogecoin — a meme coin backed by billionaire Trump ally Elon Musk. But Nick remains undeterred and convinced that these highly volatile assets will rebound, just as they did in 2021 when their popularity surged. “I try to talk about it with my co-workers, but they don’t believe in it like I do,” he confided.
– ‘Rollercoaster ride’ – Larisa Yarovaya of the Southampton Business School in southern England said Bitcoin’s record rises were “definitely driven by investment optimism surrounding political endorsements”. She warned that could be “characterised as a bubble”, at risk of bursting and spreading beyond crypto, given they are “increasingly interconnected with traditional assets in today’s financial landscape”. Yarovaya also called the growing influence of “political personalities” on the sector “significant and highly concerning”. “Powerful individuals can easily exploit the trust of their followers for personal gain, leading to serious conflicts of interest,” she warned.
The day before his inauguration, Trump launched his own meme coin — the “Trump” — posing serious ethical questions given his administration will undoubtedly exert a big influence on crypto during his four-year term. “When Musk speaks or tweets, immediately the price of crypto can jump, because people are afraid of missing the opportunity,” explained Stan, a 28-year-old Paris-based public affairs consultant and crypto investor. He also asked for anonymity. For Stan, investing in meme coins is like “buying a lottery ticket”.
Savva, a 26-year-old research assistant in London, has personal experience of crypto’s rollercoaster ride, recalling how his first foray into meme coin investing made him $700 within minutes. “That’s kind of what hooked me,” he told AFP, also declining to give his last name. The tech enthusiast, who developed his own short-lived meme coin-trading robot, found his experience with crypto highly stressful. “A lot of the times I couldn’t hold conversations because I was worried that my assets were doing poorly or that I was going to lose all my money,” he noted.
Although Savva still believes in the philosophy of cryptos, which allow investing outside of traditional financial institutions’ controls, he has retreated after losing the $5,000 he invested. “It took a huge toll on me physically and mentally and I was just like ‘I need to stop’,” he said, adding: “It’s always too late when you realise.”
© 2024 AFP
