Since bitcoin hit an all-time high in November 2021, ~$2T of cryptocurrency value has been erased, which is more than two-thirds of all the crypto that existed
The cryptocurrency industry was built on swagger, enthusiasm and optimism. All three are in short supply these days, as losses and layoffs mount.
Context & Ripple Effects
The June rout follows a January selloff that left bitcoin and ether more than 50% below their highs, turning an early-year decline into an industry-wide contraction marked by losses and layoffs. It also echoes the 2018 collapse in aggregate crypto value, when bitcoin and major altcoins fell sharply after a much smaller market peak.
The scale matters because the drawdown is no longer confined to a single token: the related coverage frames it as a broad loss of value across cryptocurrencies, with retail investors and prominent crypto holders both exposed.
First-order effects
- Crypto holders have absorbed a loss of roughly $2 trillion in market value since bitcoin’s November 2021 peak, while crypto-industry employers face mounting layoffs.
- Bitcoin’s downturn has become a market-wide event, pulling the value of other cryptocurrencies down alongside it.
Second-order effects
- The loss of wealth across token holders reduces the financial cushion supporting crypto firms and the investors exposed to the sector, intensifying the retrenchment already visible in layoffs.
- The comparison with 2018 makes a repeated boom-and-bust pattern harder for the industry to dismiss as an isolated decline, reinforcing the broader two-thirds market-value wipeout as the defining measure of the rout.
Third-order effects
- Repeated, broad crypto drawdowns widen the sector’s legitimacy gap: market participation becomes more dependent on confidence that can withstand large, synchronized losses.
- If the pattern persists, crypto’s industry structure will favor firms able to operate through sharp market contractions rather than those reliant on continued appreciation in token values.
The trend: Crypto is exhibiting a recurring cycle in which broad token-market selloffs translate quickly into pressure on industry employment, investor wealth, and perceived legitimacy.