November 2021, and coronavirus was dwindling, optimism was climbing, and tensions were fading. So much so that wannabe investors were climbing onboard to what they believed the trend of the moment.
Bitcoin interest from speculators increased exponentially in 2021 and growth was so high from novices jumping aboard the bandwagon that Bitcoin was valued at nearly US$69,000 in November.
In December and January 2022, it dropped approximately 50% and those shareholders believed it would soon recuperate. Bitcoin partially recovered and then the Ukraine war came, petrol and gas prices rose, high inflation, and worry across the board followed.
Terra’s stablecoin Luna was in trouble. The owner, Don Kwon from South Korea fired his management team and was under the impression that alone he could make good judgment calls for the company. As time progressed his ideas backfired and share prices dropped until a collapse was inevitable. The fund lost traction, shares plummeted, and eventually US$50 billion dollars was eaten up. One recent online source is saying that two traders caused the collapse.
Two weeks later the owner came up with another plan, Terra 2.0 and pledged allegiance to his portfolio of investors, once bitten, twice shy. Big players in the market like venture capitalist firm Anderson Horowitz and cryptocurrency exchanges like Binance, both major firms in their respective markets supported such an endeavor which made me feel those invested have their pockets deep in the slump.
Anderson Horowitz (a16z) who has invested billions of dollars are true believers and say that when the market prices are down then it is the right time to invest. Speculative to say the least considering since their statement in May, cryptocurrencies have gone down even further.
The big question then is if now is the right time to invest as a16z and Binance have made clear. In hindsight, there is no doubt that blockchain technology has provided a mega system for decentralized money management.
However, blockchain is already being used by the banking industry and promises to facilitate international transactions, reducing room for error, and economically speaking offers benefits all around. But this is institutional leverage which attends businesses, and eventually will be considered for individual transaction, as well.
Many of the 19,000 Altcoin and Shitcoin cryptocurrency firms appearing on the market are time wasters and traders of cryptocurrency need to be monitored wisely, as there are many unscrupulous exchanges, wallets, and anyone vested in the markets will swear blind that investing is a good business. It’s in their interest to promote!
Bitcoin has crashed to around 20k per token from 69, so that shows its volatility. That has occurred in just over six months. I think it’s a very risky arena to play in. There are no odds in its favor at the moment. As it stands a token which was worth less than a dollar in 2009 to now be worth 20k is outstanding traction, so it wouldn’t surprise me if it dropped to below 10k.
Still, the balls in your court, as I am not a professional advisor, or broker who can prove it either way. It could go up, or down. Needless to say, it is a speculative market that could bounce up and down for many years to come. If you do decide to invest, don’t put all your eggs in one basket.
When I wrote this blog Bitcoin had bottomed out at US$19,244, but over the last week it’s recovering, and last Friday hit US$22,797. Your guess is as good as mine as to where it is heading in the future!
Take care!
Prof. Carl Boniface
Vocabulary builder:
Wannabe (adj) = aspiring, would-be, hopeful, budding
Onboard (adj/adv) = aboard, on the ship, train, bus, involved, committed, on the team, on the project. On our side
Bandwagon (n) = movement, cause, trend, craze, fashion, lobby
Once bitten, twice shy (idiom) = used to mean that a person who has failed or been hurt when trying to do something is careful or fearful about doing it again.
Slump (n) = fall, crash, collapse, nose-dive, decline, plummet, drop, plunge
Altcoin = An Altcoin is an alternative digital currency to Bitcoin. The word Altcoin is a portmanteau of "alternative" and "coin", to form "altcoin". It actually refers to a group of cryptocurrencies, ultimately all the cryptocurrencies other than Bitcoin.
Shitcoin = The term shitcoin refers to a cryptocurrency with little to no value or a digital currency that has no immediate, discernible purpose. The word is a pejorative term often used to describe altcoins or cryptocurrencies that were developed after bitcoins became popular.
Don’t put all your eggs in one basket (idiom) = to risk all one has on the success or failure of one thing. “Investors should diversify their investments instead of putting all their eggs in one basket.”