The dark side of cryptocurrency is often discussed as a series of hacks, ransomware attacks and high-profile thefts. However, for an average investor, a series of bad decisions could end up being one of those dark stories. In an interview, Pete Roberts from Nottingham, Englan, describes his story of having lost $23,000 of his savings and seeing the value of his digital coins slide to just $4,000 in only a few months.
The Story of FOMO
The fear of missing out has caused havoc to many investors in the past. When it comes to volatile and unpredictable markets like cryptocurrencies, the risks become higher. When Roberts first invested his $23,000 in digital coins last winter, he was expecting prices to go even further, but the reality came to bite him hard. He said:
“I got too caught up in the fear of missing out and trying to make a quick buck. The losses have pretty much left me financially ruined.”
The 28-year-old is one among the many investors who got caught up in the “high return” narrative of cryptocurrencies. The value of digital tokens has retracted by over 75 percent in some cases, leaving winter buyers in a shock.
In the last quarter of December 2017, Bitcoin and other cryptocurrencies were going through another one of their boom and bust cycles. Only this time, a large number of ordinary people, some even first-time investors, had put their money into the market. The sheer inflow of cash led to the creation of a massive asset bubble that subsequently burst, resulting in a lot of people losing all or most of their investment.
Irrational Investing Is a Crypto Crime
Former banker and crypto investor Alex Kruger has a word of advice for newbies in this sector:
“What the average Joe hears is how friends lost fortunes. Irrational exuberance leads to financial overhang and slows progress.”
It is hard to determine precisely how many people lost their money in the crypto markets during the December 2017 boom and subsequent fall. Those who invested before the bull run are generally ok as the value of their investment is probably still higher than the initial stake. For the others, it is a story of huge losses.
Between October 2017 and March 2018, Coinbase doubled their customer base, leading us to believe that most of these folks bought high but are now left with assets worth a fraction of their original cost.
An example of this irrational FOMO investing is Kim Hyon-jeong, a 45-year-old teacher in Seoul who invested $90,000 using funds drawn from an insurance policy, her savings and a loan. Her investments are now down by 90 percent.
It is important for investors to note that cryptocurrencies are an unregulated and highly volatile asset class, and investing should only be done with the money one can afford to lose. The investors who have lost everything in this process have no other option but to wait for another bullish run to cash out or sell now at a huge loss.
An Investor Explains How He Lost His Life’s Savings in Cryptocurrencies was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.