Every second headline was shouting about how ‘Crypto Could Hit 1 million!’ or hurriedly explaining ‘How You Could Become a Newly Minted Crypto Millionaire’.
The roaring optimism carried over into the New Year. And as the champagne bottles popped open, and the clock ticked over to midnight, bitcoin was inching ever closer to an all-time high.
But the excited heard of bulls that drove the bitcoin price to nearly US$20,000 at the beginning of the year are now nowhere to be seen. And scepticism has settled in as the default attitude towards anything crypto related.
Of course, expectations were too high to begin with. Like most tech booms, cryptos’ debut into the mainstream was jarring to say the least. Moving rapidly from a niche tech concept that only fringe communities knew of, to an investment extravaganza everyone was scrambling to get in on.
But everything that goes up, must come down. And the crash that followed the bubble’s burst was dramatic to say the least.
In January, bitcoin fell by more than $44 billion in value. It tumbled from its high of $20,000 in 2017 to a measly $9,000. And other smaller alt-coins soon followed suit.
It appeared that the volatility and unreliability of crypto had finally taken its toll.
The long list of exchange hacks proved to be a major setback for investors. To name a few, the Coincheck exchange hack in January saw $530 million worth of cryptocurrency stolen. And the Bitfinex hack of 2016 lost approximately $72 million worth of bitcoin.
Just this week, a Japanese crypto exchange, Zaif, was hacked, with $59 million worth of crypto stolen due to a security breach.
When you add the price volatility onto this, it’s clear that cryptos aren’t exactly the safest bet. But it’s their exciting nature that has kept people investing against all rational judgement. Everyone, particularly millennials, want a piece of the pie. And for those who have grown up in the digital age, the appeal of this technology has kept the crypto trend alive and kicking.
A second chance for crypto?
Even though the crypto price has been a rollercoaster ride, it has been necessary to create renewed stability in the market. As the hype- and fad-investors have now died down, cryptos have been able to recover and stabilise.
Bitcoin is sitting at US$6,397.21, at time of writing. Which is still an incredible rise from its humble beginnings of $12 a coin.
It’s also important to keep in mind that every time crypto has suffered a decline, it has always bounced back to higher highs. As our resident crypto expert Sam Volkering notes, when bitcoin fell to $890, it bounced back to $2,700. And from $1,800 it bounced back to $4,900. So if history is anything to go by, the next bounce back could be even bigger.
Baiju Bhatt, CEO of crypto trading app Robinhood, couldn’t agree more:
‘[Crypto] has this tenacity to it which it just keeps coming back. There are times when there are big run ups in the price, and the price goes down and its relevance in society seems to fade back. And it keeps coming back.’
However, with all of the crypto exchange hacks and unreliable new cryptos popping up, it’s clear that the unregulated world of crypto is still susceptible to attack. So if you’re looking to get into the crypto market, before it potentially booms again, it’s best to seek out the advice of an expert.
Sam Volkering, who has been involved with cryptos since bitcoin was $12 back in 2010, has just re-released his book Crypto Revolution: Bitcoin, Cryptocurrency and the Future of Money.
Inside you’ll discover a step-by-step guide to understanding cryptos, as well as everything you need to potentially profit from this latest tech boom. Sam outlines things to avoid when investing in crypto and the cryptos you should gravitate towards if you’re looking for big gains.
His book has just been released in print edition and you can order your copy now, right here.
This week in Markets & Money
This quarter has greeted us with stronger than expected GDP growth. While this would usually be cause for celebration, now people are starting to realise that the GDP number is a worthless measure of personal well-being. The GDP numbers are a construct by statisticians for politicians. And as Vern wrote on Monday, it does nothing to help rising levels of household debt.
To read the full story, click here.
Central and northern Euro countries are faring better than peripheral countries. With the euro, the peripheral countries have started running a balance of trade account deficits. That is, they had more imports than exports. They traditionally solved these by devaluing the currency. But with the common currency, that tool is no longer available. And as Selva wrote on Tuesday, with Europe going at two different speeds under the same currency, there could be trouble ahead.
To learn more, click here.
The US unemployment rate is shrinking. It is currently down to 3.9% from around 10% since 2008. The recent JOLTS report from the US Bureau of Labor Statistics showed that US companies are advertising jobs at record levels. Job openings have reached a new high of 6.9 million. Meanwhile, more Americans are quitting their jobs. And as Selva wrote on Wednesday, if inflation climbs higher, the Fed may need to raise interest rates faster than expected to counteract the effects.
To read the full story, click here.
According to Statista, Chipotle is only second to Taco Bell when it comes to sales and location numbers. And yet people are scared to eat there. Back in 2015, Chipotle suffered an E. coli outbreak. Chipotle had to temporarily close several locations…and lost a lot of money. But what if we could stop this from ever happening again? As Selva wrote on Thursday, there’s a new technology that may be able to stop food contamination at the source.
To learn more, click here.
But for some, old age has become a living nightmare. The risks associated with aging, reduced income, and increased healthcare costs, have been offloaded onto older individuals. At the same time, older Americans are increasingly likely to file consumer bankruptcy. And as Vern questioned on Friday, what will happen to the older generation when the next credit crisis hits?
To find out, click here.
Until next week,
Editor, Markets & Money