If you have ever made money buying and selling cryptocurrency congratulations! More people have lost their hard-earned cash, and many who purchased shares in Bitcoin, as seen below have lost a large chunk of their investment, and haven’t recovered it yet or will ever.
Many people have fallen prey to risking their money into a market that isn’t a guaranteed winner. However, the believers are prepared to invest, hold, and watch. Several cryptocurrency companies have popped up during the years, and some have crashed leaving investors broke.
Crypto prices started falling and kept falling. Bitcoin, for instance, plunged from over $65,000 in November 2021 to below $17,000 last November. As a result, much of the underlying collateral these firms were holding became worth less than the loans they had issued, effectively making several “crypto banks” insolvent.
The first two crypto lending firms to collapse were Celsius and Voyager Digital. The companies had been exposed to both falling crypto prices as well as risky loans made to crypto hedge funds like Three Arrows Capital, which was forced to liquidate and go out of business. Stablecoin Terra’s king, Do Kwon, a Korean university graduate went out of business costing investor’s billions. Then there is FTX’s meltdown which confirms!
To top it all off, banks are against crypto as it overthrows them. They certainly won’t stand for it! It gets away from regulatory finance as its digital form hides below the radar and encourages money laundering. It’s not a safe bet, as since its birth in 2009 there have been many highs and lows, but the collapse of 2022 was significant and recovery doesn’t appear to be making enough headway.
Like everything, choices have to be made. You could be lucky, but like betting, the house has the advantage. Stocks and shares are no different, especially if you play the market. Day trading is exactly that, a risky business unless you have studied such a niche and have the winning edge. If it were easy then everyone would be creaming the profits!
If you are invested then hopefully you will pull out at the right moment when returns are upwards. Some believe Crypto is a long-term investment. Others feel it should be compared to a make-believe dream!
Personally, I don’t think the potential gain is worth the risk!
Have a great day!
Prof. Carl Boniface
Vocabulary builder:
Chunk (n) = lump, portion, amount, large piece
Prey (n) = hunted game (wild animals), target, kill
Pop up (phrasal verb) = to appear or happen, especially suddenly or unexpectedly: She's one of those movie stars who pops up everywhere, on TV, in magazines, on Broadway. The words "Hard disk failure - program aborted" popped up on the screen.
Money laundering (idiom) = the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses. "He was convicted of money laundering and tax evasion."
Creaming (v) = blending, beating, softening, mashing, emulsifying, defeating
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