Crypto’s Onetime Fans Are Calling It Quits After FTX Collapse | Kanebridge News
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Crypto’s Onetime Fans Are Calling It Quits After FTX Collapse

Debacle is last straw for many who embraced crypto during pandemic

Mon, Dec 19, 2022 9:01amGrey Clock 4 min

Buying crypto was so much fun when it was going up. Now, many onetime fans are getting out.

This year has brought crisis after crisis, raising questions about the industry’s long-term prospects. Two major lenders, Voyager Digital and Celsius Network, filed for bankruptcy this summer. The price of bitcoin has plunged some 75% from its peak late last year. For some traders, the recent collapse of the crypto exchange FTX—which is dragging down other firms—was the last straw.

Crypto fund asset managers saw investors withdraw almost $20 billion in November, or nearly 15% of total assets under management, according to the research firm CryptoCompare. That brought the fund managers’ collective AUM to its lowest point in nearly two years. By contrast, many small-time investors continue to stay in the relatively boring stock market, despite losses there as well.

Dennis Drent, a former executive at a pet-insurance company, said he waded into the crypto market last December, when the world felt very different. He was growing anxious that the stock market’s record run would soon sputter and was frustrated by how little his bond investments were generating.

Around that time, he caught an appearance by a bitcoin proponent, Michael Saylor, with Fox News’s Tucker Carlson.

“He had me convinced that you can’t lose,” said Mr. Drent, who lives in Southern California.

A few weeks later, he poured about $25,000 into Grayscale Bitcoin Trust. He even had a nod from his financial adviser, he said.

It didn’t work. Mr. Drent cashed out in May, taking about a 50% loss. By then, crypto prices were falling fast. But so were stocks and bonds, an unusual coupling that reflected broad uncertainty.

Mr. Drent said he should have known to avoid a market that was so lightly regulated and that he didn’t fully understand: “I wasn’t cautious enough.”

Mr. Saylor didn’t respond to a request for comment.

Crypto use exploded over the past few years and so did crypto prices, with bitcoin soaring from roughly $9,000 in early March 2020 to about $68,000 at its peak in November 2021.

Rookie traders stuck at home during pandemic lockdowns downloaded apps that made it easy to buy crypto with a few taps on their phones. Some embraced active trading, darting in and out of different cryptocurrencies. Others thought they were taking a safer route by parking their crypto holdings at companies that offered eye-popping yields in return.

The share of U.S. households that have ever transferred funds into a crypto-related account jumped to 13% as of June 2022, up from 3% before 2020, according to data from the JPMorgan Chase Institute. It estimates that many new investors flocked to crypto for the first time last year, with activity among new users peaking around the time bitcoin prices did in November. Since then, activity has tumbled.

While crypto prices soared, financial-services companies rolled out new products and services to allow everyday investors to add crypto to their nest eggs. Some of that enthusiasm has waned.

“New customer additions have slowed…because the trust of the industry has been damaged,” said Chris Kline, co-founder of Bitcoin IRA, which allows investors to trade crypto through retirement accounts.

Making matters worse, many people followed the herd and bought crypto only when prices rose.

JPMorgan estimates that many investors who transferred money to crypto accounts did so when prices were much higher than they are now. That means many investors are likely sitting on losses.

Of course, plenty of crypto traders say they are holding on or trying to buy the dip in cryptocurrencies. Some are doing so because they believe in crypto as a conduit to change global finance. Others just don’t need the money soon.

Stephen Jones, 28 years old, said he started buying cryptocurrencies when he was in college. Mr. Jones notched some wins but started having doubts over the past year, so he sold out of some positions. Getting married in June pushed him to take another closer look at his finances, he said.

Finally, he decided to cash out his remaining holdings in October. When he saw FTX collapse shortly afterward, he was relieved that he had already dumped his crypto.

FTX “definitely opened my eyes a little bit,” said Mr. Jones, who works in finance and is based in Houston. “I’m not really seeing as much value-added activity as was initially promised.”

Nick Torrico, 26, had about $10,000 in mainly bitcoin, Ethereum and VeChain at Voyager when it filed for bankruptcy in July, and he doesn’t know if he will see all of that money again.

After diving into cryptocurrencies a few years ago, he has pulled back on some of his trading, especially in smaller coins.

Mr. Torrico said he is glad that he has diversified his holdings and didn’t pour all of his money into crypto. He is holding more in cash in his investment account. He has made some stock trades with borrowed money and could face margin calls if shares of some of his companies fall farther.

Still, Mr. Torrico, who works in finance, said he remains optimistic about blockchain technology and expects more regulation of crypto, which he thinks will help the industry. He still holds bitcoin and ether, the two biggest cryptocurrencies, and plans to keep buying regularly.

“A lot of bad actors have been exposed,” Mr. Torrico said. “My biggest lesson is to be patient and not try to make fast money.”

—David Benoit contributed to this article.


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American workers have cut the number of hours they spend in their jobs since 2019, but no group has dialled back its time on the clock more than young, high-earning men whose jobs typically demand long hours.

The top-earning 10% of men in the U.S. labor market logged 77 fewer work hours in 2022, on average, than those in the same earnings group in 2019, according to a new study of federal data by the economics department at Washington University in St. Louis. That translates to 1.5 hours less time on the job each workweek, or a 3% reduction in hours. Over the same three-year period, the top-earning 10% of women cut back time at work by 29 hours, which translates to about half an hour less work each week, or a 1% reduction.

High-earning men in the 25-to-39 age range who could be described as “workaholics” were pulling back, often by choice, says Yongseok Shin, a professor of economics, who co-wrote the paper. Since this group already put in longer hours than the typical U.S. worker—and women at the highest income levels—these high earners had longer work days to trim, Dr. Shin says, and still worked more hours than the average.

The drop in working hours among high-earning men and women helps explain why the U.S. job market is even tighter than what would be expected given the current levels of unemployment and labour force participation, Dr. Shin says.

“These are the people who have that bargaining power,” Dr. Shin says of the leverage many workers have had over their employers in a tight job market. “They have the privilege to decide how many hours they want to work without worrying too much about their economic livelihood.”

The paper published by the National Bureau of Economic Research, which isn’t yet peer reviewed, suggests high earners were more likely to benefit from flexible working arrangements, which could be a factor in reduced work hours.

Before the pandemic, Eli Albrecht, a lawyer in the Washington, D.C., area, says he worked between 80 to 90 hours a week. Now, he says he puts in 60 to 70 hours each week. That’s still more than most men in America, who averaged 40.5 hours a week in 2021, according to federal data.

Mr. Albrecht’s schedule changed when he shared Zoom school duties for two of his young children with his wife. He’s maintained the reduced hours because it’s making his relationship more equitable, he says, and gives him family time.

“I used to feel—and a lot of dads used to feel—that just by providing for the family financially, that was sufficient. And it’s just not,” Mr. Albrecht says.

The downshift documented by Dr. Shin and his colleagues occurred as many professionals have been reassessing their ambitions and the value of working long hours. Emboldened by a strong job market, millions of Americans quit their jobs in search of better hours and more flexibility.

Overall, U.S. employees worked 18 fewer hours a year, on average, in 2022 compared with 2019, with employed men putting in 28 fewer hours last year and employed women cutting their time by nine hours, data from the U.S. Census Bureau’s Current Population Survey show. The average male worker put in 2,006 hours last year, while the average female worker logged 1,758 hours.

Separate data from the Census Bureau suggests that men with families, in particular, are working less. Between 2019 and 2021, married men devoted roughly 13 fewer minutes, on average, to work each day, according to the American Time Use Survey, which hasn’t yet published 2022 figures. They spent more time on socialising and relaxing, as well as household activities, according to men surveyed by the Census Bureau. The amount of time unmarried men spent on work changed little during that same period.

As high-earning workers in the U.S. cut back, low-wage workers increased their hours, according to Dr. Shin’s research. The bottom-earning 10% of working men logged 41 hours more in 2022, on average, than in 2019. Women in the lowest earning group boosted their hours worked by 52 last year compared with 2019.

While women work fewer hours than men, the unpaid labor they perform outside of their jobs has been well documented. Many working mothers take what’s termed a “second shift,” devoting more time outside work hours to child care and housework.

Maryann B. Zaki, a mother of three who has worked at several firms, including in big law, recently launched her own practice in Houston, giving her more control over her hours. She says she’s noticed more men in her field opting for reduced schedules, sometimes working 80% of the hours normally expected—which can range from 40 to more than 80 a week—in exchange for a 20% pay cut. For the average lawyer, that would amount to a salary reduction of tens of thousands of dollars each year; such arrangements were initially offered to aid working mothers.

Responding to new expectations of work-life balance may be particularly vexing for industries already facing staffing shortages, such as those in medicine. Dr. Lotte Dyrbye, the chief well-being officer for the University of Colorado School of Medicine, said she often hears from early-career physicians and other medical professionals who want to work fewer hours to avoid burnout.

These medical workers are deciding that to be in it for the long haul requires a day every week or two to decompress, Dr. Dyrbye says. But as staff cut back their hours, it costs medical organisations money and may compromise access to care.


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