How can people still afford to pay their bills?
The week's crypto crash has hit an astonishing round number, Bloomberg points out: it's now lost more than $1 trillion — that's trillion with "t," a staggering sum — in value since late last year.
Bitcoin alone lost more than 12 percent of its value on Friday and dropped to its lowest level since July of 2021, bottoming out at a wretched $34,000 at press time. That means that since a peak in November, it's lost more than 45 percent of its value. Other coins have lost the same, if not more, value in the same time period.
Bloomberg reports that this marks the second largest decline ever in the currency's history, according to Bespoke Investment Group.
"It gives an idea of the scale of value destruction that percentage declines can mask," Bespoke analysts told Bloomberg. "Crypto is, of course, vulnerable to these sorts of selloffs given its naturally higher volatility historically, but given how large market caps have gotten, the volatility is worth thinking about."
The current crypto crash is especially astonishing when compared to one of the darkest days is US history — October 29, 1929, commonly known as Black Friday — when the stock market crashed, taking about $14 billion in wealth down with it By the end of 1929 only a few months later, the losses totaled around $40 billion.
For context, $40 billion in 1929 dollars — lost in a similar time frame to the current crypto crash — adds up to about $600 billion in 2022's dollars. That means the current crypto market crash has lost more than the losses in 1929 that spurred the Great Depression of the 1930s.
Given those flabbergasting figures, it's worthwhile to consider how the crypto world could try to tamp down its signature volatility.
Just yesterday, the Wall Street Journal published an op-ed by former Attorney General Makan Delrahim on crypto regulation. Delrahim argued that blockchain regulation is long overdue and that implementing it will better protect people and the market. He argued that engineers and policy makers need to get on the same page to help the blockchain realize its full potential.
Government regulation could take on countless specific policies, but reducing scams, educating investors about risks or stabilizing markets through typing crypto's value to IRL currencies seems like a wise idea.
More on Bitcoin's bad influence: An Entire Country Switched to Bitcoin and Now Its Economy is Floundering