When it comes to cryptocurrency riches, it’s easy come, easy go. The markets have fallen hard so far in 2018, with bitcoin losing half its value. And they’ve dragged down some of their wealthiest investors, highlighting the extreme volatility that characterizes the nascent industry.
Ripple cofounder and executive chairman Chris Larsen, who topped Forbes’ crypto rich list two months ago, has seen the steepest decline in crypto net worth, falling from about $8 billion in late January to roughly $3 billion today, based on his holdings of XRP, the Ripple platform’s native digital currency. The company recently announced that more than 100 financial institutions are using its RippleNet blockchain platform to speed up financial transactions, but XRP has fallen to one-third of its value over the past two months.
Matt Mellon, an early Ripple investor, has also seen his crypto fortune shrink. It neared $1 billion in January, but the value of those coins hovers between $300 and $400 million today.
Cameron and Tyler Winklevoss, the founders of venture firm Winklevoss Capital and cryptocurrency trading platform Gemini, have watched about one-third of their crypto net worth evaporate over the past two months. Forbes estimates that each has crypto riches worth between $600 and $700 million. Famously, the twins were early investors in bitcoin in 2012, and they’ve been evangelizing the crypto asset since. At a New York speaking event in February organized by the American Museum of Finance, Tyler Winklevoss said he thinks 2018 will the year that Wall Street will “come flooding in” to crypto.
For Ethereum creator Vitalik Buterin, the tumbling value of ether has pulled down his estimated crypto net worth by more than half, to between $100 and $200 million. Although the Ethereum platform continues to attract new cryptocurrency projects at a rapid pace, ether’s price has dropped from about $1,000 to below $400.
The virtual currency markets are still up substantially compared with the summer of 2017, but why have they taken such a hit in 2018? Bart Stephens, cofounder and managing partner at crypto investment firm Blockchain Capital, tells Forbes that potential government intervention in cryptocurrency exchanges has people worried. “If U.S. regulators are cracking down, if exchanges are being pressured by regulators, then liquidity could be materially hampered,” he says. “The enemy of capital formation is uncertainty. When you don’t know the rules of the road, it’s hard to know whether to drive on the right side, left side, at 15 miles an hour or 50 miles an hour.”
Alex Sunnarborg, founding partner of New York crypto hedge fund Tetras Capital, thinks the downturn has been caused by a lack of new money coming into the market. Last fall, the influx of retail investors pushed prices up, he says, and “for prices like that to sustain, more capital needs to come in. People were hoping that institutional money was right around the corner.” But that money has yet to materialize.