Cryptocurrency investors learn volatility matters

August 20, 2018
Chris Wheal

The value of cryptocurrency market has declined 75% or $600bn since it crested in January, causing some investors who ploughed their savings in to the coins to rue their over enthusiasm the New York Times reports.

The article lays bare some of the fallacies that investors indulged in while throwing all of their eggs in to one basket as the price of bitcoin surged in December 2017 hitting a peak price of $17,900.

Investors at the retail end, enthralled by the idea of potential bitcoin riches would have seen the value of their alt coins investments shrink substantially and many do not recoup losses. The article cites that more people put money into virtual currencies last fall and winter than in all of the preceding nine or so years.

Bitcoin’s lessening value was not as deep as other altcoins but the speculative nature of cryptocurrencies remain clear. Earlier this year, as the price of bitcoin went into freefall and governments in South Korea and China used regulatory measures to protect consumers.

Capital market analysts warned back in January this year of the speculative nature of cryptocurrencies and said in a note to investors: “Accordingly, it has all the hallmarks of a classic speculative bubble, which we expect to burst. Triggers for the bubble to burst could be a further crackdown by regulators or a major hacking attempt.”

At the time of publishing, the bitcoin stood at $6,667.95 holding steady over the last six days between $6,250 and $6,660 according to Cointelegraph.

Sticking it to the man

Although some investors continue to believe in digital currencies and their revolutionary abilities, others have become less keen.

One such investor described in the article is Charles Herman, a 29-year-old small business owner in Charleston, SC, who became involved with virtual currencies last September and has abandoned them turning to real estate instead. He was quoted that he “felt like he had wasted 10 months of his life trying to play the markets.”

Hernan was able to eventually recover his initial investment and said, “I guess I thought we were ‘sticking it to the man’ when I got on board,”  He said. “But I think ‘the man’ had already caught on, and had an exit strategy.”

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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