The 2021 Bitcoin bubble is deflating and hitting a $1.3 trillion industry built on to-the-moon speculation and rampant leverage.
The damage from the latest selloff is spreading across the world of crypto loans, options and futures — wiping out money-spinning strategies from the famous basis trade to yield farming.
Even with Wednesday’s rebound, Bitcoin at around $31,700 is still trading near the lower end of its range over the past two months, and down about 50% from the April peak.
This means bulls are getting schooled on the need for restraint, with hedging costs rising and trading activity across the much-hyped decentralized finance community on the wane.
“The hype has toned down,” said George Zarya, chief executive officer at crypto prime brokerage Bequant. “It’s a 24/7 market, so for the entire industry it’s an exhausting process. When summer comes, it’s very timely. You need a little bit of rest.”
Here are all the signs crypto speculators have yet to regain their gumption after the May rout.
