Lessons we have yet to learn from the Missing Cryptoqueen

Five years after her disappearance, nobody still has any idea where she is. Dr. Ruja Ignatova, the charismatic founder and public face of OneCoin, simply disappeared, and hasn’t been seen since.

Dr. Ruja, as she was known, a German-educated Bulgarian with a penchant for glitzy ball-gowns and glossy crimson lipstick, mesmerised her audiences on some of the world's biggest stages while pumping up the prospects of her fraudulent cryptocoin empire.

OneCoin, billing itself as the Bitcoinkiller as its plans for global domination of the cryptospace reached ever more outlandish proportions, become one of the hottest sellers in the early crazy rush for crypto.

Dr. Ruja vanished permanently overnight in November 2017. Her brother, who took over leadership of the business, was promptly arrested by the FBI and is still languishing behind bars, as are a number of the burgeoning OneCoin empire's senior lieutenants.

The jig, as it were, was clearly up. As recounted in the memorable BBC podcast, The Missing Cryptoqueen, the OneCoin world collapsed with losses to the investing public of sums estimated to have been up to €15bn.

At least this is all in the past, you might say. But wait. The extraordinary thing is that, to this day, diehard believers in the OneCoin cult still gather to inject their hard-earned money into a coin and "educational package" that is no longer even tradeable - and even at its peak could not be traded for anything other than unspeakable junk from a catalogue that looked as if it had been produced for a local flea market.

That's the power of hype. And the power of tailgating in an industry which is based on the premise of rising prices, where even the dodgiest propositions can suck in investors if the overall trend of the market is up.

Now, five years later, the collapsing cryptocurrency markets are exhibiting many of the signs that immediately preceded the 2008 financial crisis. As with Lehman, the problem wasn't just the individual bank itself, but the interconnectedness of the whole industry. In crypto, we're seeing the same thing - the collapse of individual currencies, constipated platforms that block payouts, mass layoffs, and the insolvencies of overcommitted hedge-funds.

What starts out as individual hard-luck cases or cases of outright fraud, soon spreads to infect a whole industry. The many thousands of different cryptocurrencies and the platforms that support them are only at the beginning of the colossal shrinkage that will wipe out further trillions of investor money in the coming years.

It is nonetheless extraordinary how long it can take for investors to face up to new realities. Like believers in the defunct OneCoin, who are still pumping money into a verified corpse, it can take investors in industries such as real estate years - or even longer - to accept that historic prices and yield expectations are suddenly, and irreversibly, obsolete.

Figures just in show that Germany experienced its first trade deficit in more than 30 years - repeat, 30 years - in May. Rising energy prices and global trade disruption caused a €1bn deficit - partly due to sanctions imposed on Moscow, but also due to widespread lockdowns in China, Germany's second-biggest trading partner, which helped to squeeze demand for German goods in other EU countries.

Many observers expect Germany to continue to run a trade deficit over the summer, and maybe even the next couple of years. The prices of German imports have risen by more than 30% in the year to May, while its own export prices have risen by 16%.

Germany's tried and trusted export-driven economic strategy has bolstered German prosperity for decades. What happens if the entire structure on which the country's wealth is built suddenly has the rug pulled out from under its feet? The country is exposed like no other in Europe to the forces that Putin's war in Ukraine might well accelerate.

Cheap energy from Russia has enabled German exporters to fill trains, planes and ships with the vehicles, machinery and equipment that China needs to continue on its path of global expansion. No other industrialised nation has a higher dependency on Russian hydrocarbons than Germany, now desperately pedalling backwards to reposition itself on all fronts.

Apart from its Russia problems, the love affair with China is being re-calculated at speed by Germany's politicians, in the light of Beijing's zero-Covid strategies, its human rights abuse record, and its tacit support of Russia's war in Ukraine.

Re-calibrating its message and mouthing platitudes by politicians is one thing - Germany has been facing criticism for its vacillation on this for the last three months, while the message from all-powerful industrialists with supply chains in China (and of course, Russia and Ukraine itself) is considerably more muted. Re-organising entire production facilities and supply lines is not something that can be done overnight, even if the will to do so were indisputably there - not by any means the case.

The last country in the world that wants to turn itself back into a manufacturing powerhouse is Germany. Its undervalued currency, its commitment to higher-level value-adding education and its managerial prowess in far-flung operational management all make the current maelstrom of life-changing economic forces deeply unwelcome.

And seriously frightening. Turning away from China will alter Germany's global position fundamentally, seriously threatening the country's wealth and employment prospects. Experienced German industrialists won't be giving up their hard-won toe-hold in China without a dogged fight.

Almost nobody under 40 working in the German real estate industry will have experienced the changes we are likely to see over the coming years. In fact, while the head may be intellectually coming to terms with the different outcomes that the Excel spreadsheets may now be throwing up, digesting the reality will be a different matter altogether. And we're not there yet.

Few countries will have to re-invent themselves in the way Germany will need to over the coming years. There will be opportunities for the really nimble, but we're not yet seeing the evidence that the penny has fully sunk. We'll start to see, when transactions resume, how much realism is guiding the market.