Opinion: Winter in June - crypto style

Photo: GettyImages/NurPhoto/Jakub Porzycki

As Ethereum and Bitcoin hit lows not seen since 2017, the idea of a crypto winter, where traders keep their heads low and miners hang up their helmets till the interest in easy money returns.

Returning from holiday last year, I sat next to crypto trader Artiom (name changed) on the plane. He’d left his Belarusian border town earlier that year, packing the family into the car for Warsaw and leaving properties, businesses and friends behind. “They were confiscating businesses, there was gunfire and they were piling people into prison. I had to get out. I had a Polish card (entitling people with Polish origins from the former Soviet Union to a visa-free residence in Poland) so I knew I could go to Warsaw. I rented a flat and put the kids in the local school. I can’t officially apply for residence or citizenship here or they’d find a way to take my property away from me there in Belarus - several flats, and I can’t sell it because the prices are too low, so I am sitting tight and trading crypto. All kinds. Not just bitcoin.”

Steel nerves

“I learned all about it. You’ve got to have nerves of steel, not sell when you get scared. I can show you how to do it. How to follow the trends and make serious money. This is the last moment to get in. The authorities are closing in on crypto and soon it will be impossible to buy into it. Bitcoin will be worth over 100,000 before the end of the year. You’ll see. The ease of turning a hundred grand into a million is unbeatable. Let’s meet up.”

I didn’t keep in touch with Artiom, even though he was a great character. Designer clothes, not hiding the fact that he was a former cigarette smuggler, as he admitted. “We used to hide them in the tyres. Those were the days. I was nineteen.” But the third dose of double Greek brandy ordered from the stewardess before 11.00 AM convinced me he might be a bit of a destabilising influence.

Meghan, blasting to the moon and the rugpool

Was he typical of traders? Well, after I got back, I spoke to a Meghan, who had decided she shied away from the call back to work after the pandemic, opting to stay in her Mediterranean holiday home and trade crypto and start other businesses.

Last autumn, I got a text from her saying “I bought some baby doge crypto and hoping on it blasting to the moon”. At its launch, it was worth USD 0.000000000001. It is now worth 1185 times that, though at one stage in January this year it peaked at USD 0.000000006226. A one thousand-fold return on investment would give anyone’s finances a blast.

“I’m now just holding on to the positions I have. I was buying and selling, but I stopped looking at it every day because it got too depressing”, Meghan told me today. “I made some good money on Sol (Solana, priced USD 258 in November now around USD 28) but that was cancelled out by my losses.

Had she lost anything on any fraudulent platforms, I asked. “I went for some niche investments. I got suckered by a rugpool, a scam where a coin was set up with an impressive website and intentions to give a lot of money to marine environmental concerns. It went up from USD 10 to USD 1000 dollars rapidly, last autumn but then the whole outfit became uncontactable and the page disappeared and the value went down to ten dollars and then nothing.”

I still believe that values of the major currencies will go up eventually if you just hold on, but I would recommend staying away from start-up ventures,” Meghan said. She has meanwhile set herself up as a coach and is attracting interest worldwide.

Crypto winter

Experts believe that the crypto market will go into cold storage for months if not years as prices subside. The largest exchange Coinbase has laid off some 1000 staff, around 20 percent of its workforce according to Reuters.

Meanwhile, the leading cryptocurrency platform Celsius froze all withdrawals from its platform on Monday, as bitcoin fell further. Asked on Business Arena how long the crypto winter might last, Warsaw University’s Bogdan Szafrański, founder of Metastrategy said we should look to data on global inflation, which is driving up interest rates. Crypto is less of a guard against inflation when interest rates are rising. In his opinion, the winter could last even two years.