This is part of a collection of studies, analyses and interviews on the cryptocurrency market and its future. This is the primary installment. — Ed.
After the crypto market crashed in 2018, Lee Ji-hoon, a 35-year-old workplace employee, stored his distance. But amid the current market frenzy surrounding cryptocurrencies, Lee felt the urge to reopen an account he had practically forgotten about for 3 years. As quickly because the account was reopened at Bithumb’s offline buyer middle final week, he was instantly stunned by the astonishing numbers: The tiny piece of a bitcoin he held, 0.0003, was now value round 20,000 received ($17.73). A mere 188 received value of Bitcoin had yielded a ten,540 p.c revenue.
“I want I had purchased extra prior to now couple of years,” mentioned Lee. “I’m back within the recreation now.”
Lee is one of many newbie investors in South Korea returning to the crypto market with a mix of concern over its dangerous nature and hopes of hitting the jackpot.
As digital coin costs break data, it’s not solely the economically lively inhabitants of their 30s and 40s however a variety of folks speeding back to the crypto sector.
According to an April survey of 1,855 workplace staff by native recruiting portal Saramin, 40.4 p.c of the respondents mentioned they invested in cryptocurrencies whereas the remainder didn’t. Those of their 30s have been essentially the most avid crypto investors, with 49.8 p.c investing in crypto property. Among these of their 40s, 34.5 p.c mentioned they traded crypto cash, whereas 16.9 p.c of these of their 50s mentioned they have been crypto investors.
It is just not the primary time that investors have chosen to take the crypto curler coaster journey regardless of fears of a sudden market crash.
The crypto market loved a quick growth in 2017 however the bubble burst the next 12 months, leaving retail investors no alternative however to desert the market till late final 12 months.
As a consequence, native crypto exchanges struggled as their revenue nose-dived to file lows.
Dunamu, which operates the nation’s largest cryptocurrency alternate, Upbit, noticed its income drop fourfold from 470.7 billion received in 2018 to 132.7 billion received in 2019, with its working revenue falling from 287.5 billion received to 53.8 billion received throughout the identical interval.
The income and working revenue of Bithumb greater than halved throughout the identical interval. Its income dropped from 391.6 billion received in 2018 to 144.6 billion received in 2019, whereas its working revenue fell from 256 billion received to 67.8 billion received.
But now, with a greater understanding of crypto property, some retail investors even get pleasure from their volatility.
A 40-year-old particular person investor surnamed Hyun lately offered all of his shares, value round 500 million received, and wager on Ethereum and different altcoins, a blanket time period used to seek advice from cash aside from Bitcoin.
“Stocks in each Korean and US markets have proven lackluster efficiency since late final 12 months, and the ROI from the inventory markets has been disappointingly low, in comparison with the crypto market,” mentioned Hyun. “I don’t assume I might transfer my property back to the inventory markets.”
“Some altcoins I’ve leap 100% in a single day, so a 10-20 p.c value change is nearly nothing,” he mentioned.
Michelle Kim, a 40-year-old workplace employee, mentioned she felt numb about her “insufficient” 10 p.c to twenty p.c positive factors within the inventory market and had determined to interact in closely leveraged margin investing in cryptocurrencies.
“I shorted Ethereum when it was shifting up in a several-day rally. I poured in my financial savings hoping that the value would go down finally,” she mentioned.
As the value went up, she wanted extra margin deposits and injected her financial savings for 4 days however the rally wouldn’t cease.
“That one mistake in positioning prices me $12,000,” she mentioned. “But I can’t cease interested by what if I longed Ethereum as a substitute of shorting it, I might have made greater than $10,000 with simply $2,000 of funding.”
In response to digital coin funding by their staff, a number of native banks — together with KB Kookmin, Woori and KEB Hana — have issued warnings to chorus from spending an excessive amount of time on cryptocurrency buying and selling, saying it may have a destructive affect on work high quality.
Woori Bank, as an example, banned investing throughout working hours and boasting about earnings to colleagues.
FOMO amongst seniors
The worry of lacking out and the jackpot-seeking mindset have unfold to older investors too.
According to Rep. Kwon Eun-hee of the People Party, of the 23.7 million new accounts with the 4 largest cryptocurrency exchanges, Upbit, Bithumb, Coinone and Korbit, 276,945 belong to folks aged 50 and above. People of their 60s and 70s deposited 407 billion received, or a median of 71.1 million received per particular person. This is twice as a lot as the general common of 35.4 million received.
Older investors, who usually will not be as acquainted with digital expertise as youthful folks, generally fall sufferer to scams. An growing quantity of pyramid schemes try to draw older investors on-line and offline by guaranteeing excessive returns, based on native media studies.
For some specialists, who see no intrinsic worth in crypto property, the most recent crypto frenzy reminds them of strolling on skinny ice.
“I’m extraordinarily apprehensive concerning the newest crypto fad, particularly those that have been obsessive about hitting the jackpot through crypto funding,” mentioned Lim Jong-in, the dean of the Graduate School of Information Security at Korea University. “Investing in crypto currencies, which haven’t acquired a authorized forex standing, may deal a critical monetary blow to particular person investors.
“Since crypto currencies are additionally utilized in crimes, akin to cash laundering and drug trafficking, there could possibly be world restrictions led by the US authorities or United Nations down the highway,” the professor mentioned.
Cryptocurrency transactions world wide elevated to three.8 trillion in March, up practically 30 p.c from the earlier month, based on world market analysis agency CryptoCompare.
Among native exchanges, Upbit, Bithumb, Coinone and Korbit have acquired a BB ranking, the third-highest in CryptoCompare’s eight-class analysis system.