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Bitcoin Users Beware: Emerging Market Investors Hardest Hit by Cryptocurrency Market Collapse

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It is reported that the Bank for International Settlements (BIS) said in a report released on Monday that although most users of encryption applications around…

Bitcoin Users Beware: Emerging Market Investors Hardest Hit by Cryptocurrency Market Collapse

It is reported that the Bank for International Settlements (BIS) said in a report released on Monday that although most users of encryption applications around the world suffered losses from holding Bitcoin after the collapse of Terra ecosystem and FTX exchange last year, investors outside major economies were the hardest hit. According to the report, after the collapse of Terra in May 2022, more than $450 billion disappeared from the cryptocurrency market, and another $200 billion was lost after the bankruptcy of FTX in November. By December 2022, the middle investors will lose $431, equivalent to nearly half of the total $900 they have invested since downloading the application. It is worth noting that this proportion is even higher in several emerging market economies such as Brazil, India, Pakistan, Thailand and Türkiye. If investors continue to invest monthly, more than four fifths of users will lose money.

BIS: The collapse of FTX and Terra has hit retail crypto investors in emerging economies hardest

Interpretation of the news:


The recent collapse of the cryptocurrency market has left many investors reeling from steep losses. According to a report released by the Bank for International Settlements (BIS), users of encryption applications around the world who held Bitcoin after the collapse of Terra Ecosystem and FTX exchange last year were hit especially hard. However, investors outside major economies, particularly those in emerging markets such as Brazil, India, Pakistan, Thailand and Türkiye, suffered the most.

The report states that after the collapse of Terra in May 2022, over $450 billion vanished from the cryptocurrency market. Another $200 billion was lost after FTX declared bankruptcy in November. By the end of December 2022, middle investors lost $431, which is almost half of the total $900 they invested since downloading the application. More importantly, the proportion is higher in several emerging market economies, where middle investors lost an even greater percentage of their investment.

If investors continue to invest monthly, more than four fifths of users are expected to continue losing money, with emerging market investors particularly vulnerable. The BIS report emphasizes the need for investors to exercise caution when investing in cryptocurrencies, particularly in light of market volatility.

This report highlights the inherent risks associated with investing in cryptocurrencies, particularly for individuals in emerging markets. The sudden collapse of Terra Ecosystem and FTX exchange underscores the volatile and unpredictable nature of the cryptocurrency market. Investors, particularly those in emerging markets, must carefully consider and prepare for the potential risks associated with cryptocurrency investments.

In conclusion, the report warns of the dangers of cryptocurrency investments and emphasizes the importance of exercising caution when entering the market. The collapse of Terra Ecosystem and FTX exchange serve as an important lesson for investors, particularly those outside major economies, who must weigh the potential benefits against the risks associated with cryptocurrency investments.

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