Ruinous £1 trillion crypto crash proves greedy investors never learn

Bubbles are fuelled by the fear of missing out, and much of hype around crypto was blown up by online forums and social media. The more money that flooded into a particular currency, the more inflated its value became.

Now, investors are using these same forums to share helpline numbers with those who have lost everything.

But while the mood around cryptocurrencies is sombre now, there are still some who believe the technology behind it all has a future. Former health secretary Matt Hancock does not want to see Britain miss out on a cryptocurrency revolution.

He told the London Crypto Club earlier this year: “There is a huge change ­happening in the world, it is going to disrupt everything in finance and we need to be at the centre of it.”

The Tory MP is right that “caveat emptor” applies, we should be allowed to risk all of our money if we choose to – but only if we are given enough details to make an informed decision.

As Mr Hancock told me this month in his parliamentary office overlooking the Thames: “The idea that you need to stop people from investing their own money is highly patronising.”

Instead, he says the “core problem” is that regulation has not kept pace. You can always bet your house at Royal Ascot, but at least you are given odds. This month’s crash shows how ­vulnerable we will always be to pyramid schemes. Regulation will never tame basic human greed, investors now ­nursing losses need to take some responsibility.

There has never been such a thing as a genuine get-rich-quick investment, and the value of any cryptocurrency has always been a fallacy. Savvy investors have made money only when ­taking a punt before unsophisticated investors, the greater fools, piled in.

It’s no coincidence that crypto­currencies peaked in the depths of the pandemic when people had lockdown savings to fritter away.

Cryptocurrencies such as Bitcoin were billed as “digital gold” and a hedge against inflation. Now, crypto has been put to the test, and so far, it’s proven, like tulip bulbs in 17th-century Holland, to be worth almost nothing.