There was buoyancy when bitcoin first dropped to $37,500 on Feb. 2 from an all time high in November 2021 of $69,000. It was a gold rush moment as Kenya’s digital natives dashed to do what they have always done during such price slumps—buy the dip—stocking up while prices were low.
And it paid off. A month later, Mar. 28, bitcoin’s price rose to $47,400. Then the steady decline began.
When bitcoin’s price tumbled to $36,000 on May 6, Kenyan crypto traders rushed to online marketplaces to purchase it at the low price hoping that it would spring back to over $40,000 in a few days.
A week later, world’s biggest cryptocurrency’s price is still below $31,000 and at risk of great fluctuation are the over 18,000 other cryptocurrencies that heavily rely on bitcoin’s market performance. Thousands of Kenyan traders are finding themselves holding an asset whose price is declining daily.
Kenya boasts one of Africa’s most vibrant crypto communities
Finder’s Jan. 2022 Cryptocurrency Adoption Index ranks Kenya 12th for cryptocurrency ownership out of 27 countries surveyed globally. Cryptocurrency ownership in Kenya is however behind countries like Nigeria (21%) and Ghana (17%).
16% of Kenyan adult internet users, an estimated 4.8 million people own cryptocurrency, based on an online survey of 52,883 people across 27 countries. Bitcoin ownership in Kenya remains above the global average of 39.1%, with 54.7% of crypto owners saying they hold it.
Kenya’s crypto community has been vibrant on social media over the past 10 days, sharing stories about altcoins that they bought at their lowest prices this year, only to see them plummet even further.
The panic in a community that has over the years bragged it cannot be shaken by crypto market price plunges, was painted all over social media, with some declaring that it was the end of crypto when the Luna altcoin was delisted from several digital currency martketplaces.
“I saw the Luna dip, so I went for it in Binance thinking it will rise. Then it got delisted. I lost $800,” a message circulating on social media from a Nairobi-based trader reads.
“So everybody was making money in crypto until I joined the party,” a recent crypto investor writes amid assurance by crypto marketplace Paxful that it was the right time to buy bitcoin.
But those who bought bitcoin when it hit its all-time-high of $69,000 on Nov.10 last year expressed the deepest contrition.
“I bought it last year at its peak hoping it would hit $120,000 by March. I regret to have invested my $4,000 into what now looks like a sinkhole,” Lukato Mukina, a Kenyan trader tells Quartz.
Speaking to Quartz, some traders who joined the market in December 2018 when bitcoin was at $3,200 are cashing in on their profits fearing bitcoin’s continued decline.
“I just sold my bitcoin at the price of $30,000. Watching it drop more is painful,” Maria Yusuf said.
Roselyne Wanjiru, a crypto trader who was unmoved by the tumbling prices, said between 2018 and 2020, she was on the verge of quitting crypto trade because the uncertainty bothered her. She told Quartz, “There was an overall sense that the crypto industry would fold up as though it never existed.”
Not even El Salvador, the world’s first country to implement bitcoin as legal tender was left out of taking advantage of the reduced prices. In a May 9 tweet, President Nayib Bukele revealed that the country ‘bought the dip’, adding another 500 bitcoins to government coffers.
For Victor Kyalo, who has been in the trade for six years, the panic was most felt by newer investors who he said needed more education on how the bitcoin blockchain works.
“Three traders I know were in absolute shock because they joined crypto at the beginning of April. I was prepared this would happen. Bitcoin may even drop to $20,000,” he told Quartz.
He explained that when bitcoin hit an all-time high of $20,000, it moved to $69,000 too fast and the current price drop is just “a re-visitation of the $30,000s which it spent little time on.”
Crypto trader, Chantal Justine, believes those rushing to buy the dip are only motivated by the get-rich-quick mentality and a future price meltdown is inevitable.
“Before you buy crypto at a low price, establish your relationship with money first. This is not an industry to throw money around,” she says.
Hundreds of billions of dollars have been wiped off crypto in the past weeks
Binance’s chief executive Changpeng Zhao’s attempts to quell fears that the global crypto market was headed to a crash and that cryptos are still safe investments despite the current price tectonics only attracted more online vitriol.
On May 16, Luna dropped to $0.00013 according to Coinmartketcap real-time data, two days after crypto wallet firm Coinbase warned that it would seize users’ crypto if the market slump ever led to its bankruptcy. Its quarterly earnings report detailed a $430 million loss.
But even as current markets nosedive, some investors are confident that bitcoin will hit $100,000 sometime this year.
“Don’t be perturbed, the market will recover,” Nairobi-based author of Understanding the Blockchain Benjamin Arunda told Kenya’s crypto community.
Cryptocurrency exchange FTX’s founder Sam Bankman-Fried on May 16 said that bitcoin has no future as a payments network and criticized the cryptocurrency for its inefficiency and high environmental costs.
But Binance east Africa business development manager George Mwakisha tells Quartz that traders must look beyond the cash gains when investing in a volatile crypto market.
“There are careers to be developed. Crypto educators, developers, and blockchain payments solutions,” he said.
Despite the recent bitcoin slump Mwakisha believes too much is at stake for investors to allow bitcoin to disappear from the financial scene.
“It is like saying the internet is going away. Bitcoin is here to stay.”
Names of traders have in some instances been altered to maintain anonymity