What goes up must come down … down… down

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I’m back on the blog after a 4 month hiatus. I had some not-so-minor damage to my home, which perhaps I’ll detail in a future post. So that served as a distraction from the implosion of bitcoin this year. I remember back when I would receive monthly investment statements during the 2008 financial crisis and each statement would be covered with negative numbers and red marks. It wasn’t long where I just stopped opening the statements. Nevertheless, I still continued to invest money knowing intellectually that that was what I was supposed to do.

And so it goes with crypto. Since the beginning of the year, this is how the top 10 currencies have faired:

# Name Symbol Week 1 Week 22 % Change
1 Bitcoin BTC $17,131.27 $6,400.32 -62.64%
2 Ripple XRP $3.19 $0.33 -89.66%
3 Ethereum ETH $1,097.65 $295.90 -73.04%
4 Bitcoin Cash BCH $2,881.03 $553.01 -80.81%
5 Cardano ADA $1.01 $0.0997 -90.12%
6 Litecoin LTC $300.10 $57.08 -80.98%
7 NEM XEM $1.67 $0.1064 -93.63%
8  Stellar XLM $0.71 $0.2242 -68.36%
9 TRON TRX $0.17 $0.0215 -87.37%
10 IOTA MIOTA $4.01 $0.4960 -87.63%

And this doesn’t even fully capture the highs at the end of 2017 when Bitcoin was at $20,000. Bitcoin has been the “best” performer with only a 62% loss. This makes the 2008 financial crisis sound like a bad day at the office.

What are lessons to be learned here? When people talk about investing in bitcoin 101, they always say “don’t invest what you can’t afford to lose”. That’s easier said than done when returns are going to the moon. The NY Times had a sad article about folks losing their life savings. So how much have I lost? Based on CoinTracking, I’m down about 70% of my initial investment. There’s no way to sugarcoat it, it’s a pretty bad investment. But taking a step back, my original investment was less than 1% of my net worth. I wouldn’t recommend putting more than 5% of one’s net worth into something as speculative as bitcoin, and probably closer to 1%. Fortunately, the other 99% of my investments has increased about 6% so far this year, so overall my year has been doing fine. So my crypto investment will serve as a good reminder to myself of the volatility that is bitcoin.

Does that mean I’m going to sell what’s left of my crypto? Maybe I should. But at this point, I’m just going to let it ride. I still have a small chunk of change so I could call it quits, but this the technology is still fascinating and having some money invested into crypto will help me continue following the news. And I still believe that the crypto markets will come back up. Maybe not to their all-time highs of Dec 2017-Jan 2018, but there is still money to be made.

 

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