“It’s like in the casino, it’s very hard to stop playing”. Olivier*, 27, works in the banking sector. He took his first steps in cryptocurrencies in 2017, and increased his stake during the Covid crisis: “I had a feeling that they were going to fly away.” After breaking his savings account, he buys 4,000 euros worth of cryptos and invests 15,000 more in products linked to these new digital currencies. “In a few months, I doubled my bet. It’s exhilarating, you feel superhuman, smarter than the market.” The hunt for bargains, however, encourages people to go for increasingly risky products, recognizes the young executive. “I didn’t have the intelligence to leave with my winnings. There, I lost 17,000 euros,” he confides, disillusioned.
In full euphoria last fall, the market has since plummeted. The crypto star, bitcoin, has lost 40% of its value in six months; its first challenger, ether, fell by 55%, and some cryptocurrencies, such as luna, saw their value almost evaporate. Olivier is far from the only one to experience these crazy roller coasters. Because, in ten years, the number of crypto investors has grown, and their profile has greatly diversified. Long the playground of a few insider technophiles, cryptocurrencies have gradually attracted star entrepreneurs from Silicon Valley (Jack Dorsey, Elon Musk…), traditional financial institutions (BlackRock, JP Morgan…), then the General public. Already 8% of French people have invested in cryptos or NFTs, reveals an Adan/KPMG study, more than those holding own shares.
When they jump into the “Matrix”, these little porters find themselves immersed in a strange and colorful El Dorado. Image of monkeys, punk, retro game metaverse, the crypto world was born among geeks, and it shows. “It’s like being in a manga or a comic strip. This is very popular with young people who found finance to be old-fashioned dad,” explains Alexandre Baradez, financial analyst at the brokerage firm IG France. This mysterious world has its jargon and its codes: we talk aboutairdrop and of burning, we post memes about whales (the crypto-rich) or bears (in reference to the bear market, bear market).
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This ultra-connected community offers anyone diabolically simple tools for trading. With a few clicks on your smartphone, you can buy, sell and above all follow the fluctuations of your portfolio. “It’s extremely addictive, you check your phone all the time. The values can triple in one day, it’s a hell of an adrenaline,” says Paul*, a young entrepreneur from Lille. Tools that do little to keep a cool head, because they constantly shine the spotlight on missed “good deals”. “I bought $20,000 worth of crypto in the early days of bitcoin, when it was still worth $200. When it went to $450, I sold with great upside, but if I had waited until the end of 2017, I would have won nearly 2 million euros. I admit that I have trouble digesting this story”, confides Jean-Marc, a 50-year-old entrepreneur who has also recently returned to pot nearly 80,000 euros.
“We learn in pain”
In the crypto sphere, individuals must navigate an eccentric fauna where fervent utopians rub shoulders with small-time thieves and seasoned scammers. confirms Florent*, 30 years old. They come to canvass the barge on Instagram or TikTok, dangle gold pipes or tokens promised to dazzling success… then spin off the pocketed money as soon as possible.
Those who do not fall into these tricks quickly come up against another difficulty: the crypto market is very complex to understand. A lot of stablecoins have, for example, given Internet users a false sense of security, by playing on the idea that behind every corner was 1 dollar of reserve, when the mechanisms are actually much more complex than that.
Developer, Arnaud* systematically immerses himself in white papers detailing the operation of the blockchains associated with the cryptos in which he invests. “Of 10 projects launched, 9 crash. We learn little by little – and often in pain – to evaluate them and understand market cycles.” When everyone is scared, buy, when euphoria reigns, sell, goes the saying. “I’m making a little progress, but I’m still useless. trading“, he says with humility.
“Even when you know the financial markets well, it’s not easy,” reassures Alexandre Baradez, analyst at IG France. This is all the more true since many foreign platforms are not required to inform their customers about the risks of their products. “Leverage effects, for example, have greatly exposed people who have ventured into it”, analyzes the expert. The promise of this mechanism is enticing: you bet more than what you own. “With 1,000 euros and leverage x 100, you can invest 100,000 euros”, illustrates Alexandre Baradez. But there is of course a flip side. “If the market records a small drop, for example 1% on a leverage x 100, your positions are cut automatically, and you lose all of your 1,000 euros. And this happens very often”, explains the analyst.
These particularities explain why certain small carriers find themselves in delicate situations today. “Many members have made losses of 40 to 60%, confides Hermès, a youtuber who has built up a community of 20,000 people around his channel Les Rois du bitcoin. Generally, they are neophytes who arrived with a single idea. : make maximum gains in a short time, which leads to human tragedies.” Eager to diversify his investments, Gérard, a 50-year-old Parisian, saw the value of his crypto investments halve: “My 30,000 euros invested mainly in bitcoin and ether are now worth around 17,000, so I lost quite a bit.”
“We are at the mercy of big investors who coordinate”
The situation is even more unpleasant for those who have ventured on exotic projects like the stablecoin Luna, who broke her face. “A lot of people bought to ruin and burned their fingers,” points out the Hermès youtuber. Beyond economic losses, there is also a certain disenchantment in the community. Many crypto apostles saw it as a shield against inflation. For them, the hangover is painful. “They saw that the sector was just as impacted, or even more so, by the rate hikes decided to fight against the price slippage”, deciphers Alexandre Baradez.
The arrival of traditional finance players on their playground is also making many individuals bitter. “The sector has lost its magic and its innocence”, judges Paul, the 30-year-old from Lille. It must be said that these heavyweights have incomparably more sophisticated means of predicting price movements and taking advantage of them. “We are at the mercy of a group of large investors who coordinate to raise a crypto evolving in a thin market, before withdrawing abruptly, taking a substantial gain in the process and triggering a general panic that is ruinous for the most modest,” notes Nicolas, a 30-year-old engineer.
Many small porters, however, remain surprisingly stoic in the storm. “We are in a phase where projects that are not strong enough will die, it’s unpleasant, but the technology itself retains its full potential,” says Paul. After going through a phase of trading frantic, the young entrepreneur, like many of his fellows, joined the “community of hodlers“, (from HODL crypto slang, for hold on for dear life), who decide not to touch their cryptos for years, and are betting on the very long term. It is true that more and more of them have already experienced previous crypto crashes, in particular that of 2018. This is not their first rodeo.
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*Names have been changed.
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