An aggressive sell-off has led to millions of dollars being wiped off the cryptocurrency’s valuation, while its overall price has plunged.
The cryptocurrency ethereum, which is the second most valuable coin in the market after bitcoin, has experienced a brutal drop in value after an aggressive sell off by investors.
Leading into the weekend, ethereum’s value sank by 15 per cent in just two days, dropping to $US1661 ($A2347), which was it lowest level since March 2021.
It’s an even bigger drop compared to November’s price, with the cryptocurrency down 75 per cent from its record peak of $US4878 ($A6893).
Analysts said at least $US200 million ($A282 million) of ethereum was sold off in just one day and it dropped 25 per cent in just one month.
All of the top 10 cryptocurrencies fell in the past week by at least 3 per cent except cardano, which is up 6 per cent on the week, according to CoinMarketCap data.
Ethereum currently has a market capitalisation of $US184 billion ($A260 billion), which is down by 8.9 per cent.
But there’s more pain to come for investors according to a renowned crypto sceptic after the market meltdown.
David Gerard, author of Attack of the 50 Foot Blockchain, told Nine’s 60 Minutes he was concerned about the lack of regulation in the industry, where celebrity endorsements from the likes of NBA star LeBron James had created a market full of manipulation, scammers and crooks.
“Everyone loves the siren call of a number going up and they think, here’s my chance,” he said.
“[But] we have to think about the real victims, the mums and dads, the grannies who think their retirement should go into crypto. There’s a real human cost here and that’s the ordinary people who get scammed. You can’t get rich for free. You’d think that was obvious, but people keep hoping there’s a way out and that they’ll get ahead, but it’s always a false hope. Some people do great but more people get absolutely wrecked.”
He warned much of the crypto industry had turned into a dangerous cult.
“The majority of volume, the way the market works, the way pricing is set, it all happens in a completely, literally unregulated environment,” he said.
“This crash has really brought it home to people that actually, the music’s going to stop sometime. The people who bought in just the last six months, they’re basically going to be stuck with magic beans and they’re trying to work out how to offload them. A lot of them are just going to have to take the hit and it’s not going to be nice.”
The cryptocurrency market suffered one of its biggest crashes on record last month after the complete collapse of two of the most popular and supposedly “stable” coins, terra and its sister token luna.
– with Frank Chung