When cryptocurrencies saw a huge boom last year, everyone rushed into the game, going against the ultimate rule of investing: buy low, sell high.
Everyone was rushing to buy the Bitcoin while it had already reached a high. Some other investors turned to Ethereum and other cryptocurrencies, hoping it would see the same performance as the Bitcoin did.
Today, the hype has died down. Cryptocurrencies are lulling at low prices, and no one is rushing to cash in on the virtual investment.
The value of all outstanding digital tokens has fallen by about $600 billion, or 75 percent, since the peak in January, according to data from the website coinmarketcap.com.
The New York Times interviewed a string of cryptocurrency investors and here’s what happened to these traders after the boom:
After the cryptocurrency boom
1. Some are left financially ruined
Pete Roberts of Nottingham, England, was one of the many risk-takers who threw their savings into cryptocurrencies when prices were going through the roof last winter.
Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened.
“I got too caught up in the fear of missing out and trying to make a quick buck,” he said this week. “The losses have pretty much left me financially ruined.”
2. This bust is going to take time to regain its footing
Like many investments, there will be uptrends and downtrends. But with cryptocurrency, the downtrend is expected to last a lot longer than traditional investments.
What the average Joe hears is how friends lost fortunes,” said Alex Kruger, a former banker who has been trading in the cryptocurrency markets for some time.
“Irrational exuberance leads to financial overhang and slows progress.”
The damage is likely to be worse in places where there was little to no activity before last year like South Korea and Japan.
3. The realisation that cryptocurrencies are not ready for mass adoption
One of the biggest problems with the boom in Bitcoin and other cryptocurrencies was the insurgence of amateur players into the sphere, thinking it could make them a quick buck.
Instead, many of those who entered the cryptocurrency game late last year or at the peak of the boom, would have seen great losses.
Kim Hyon-jeong, lost almost all her money investing in cryptocurrencies. The 45-year-old teacher and mother from the outskirts of Seoul, put about 100 million won, or $90,000, into cryptocurrencies. She used her savings, insurance policy money and even a $25,000 loan. Since then, she has lost 90 percent of her money.
“I thought that cryptocurrencies would be the one and only breakthrough for ordinary hard-working people like us,” she said. “I thought my family and I could escape hardship and live more comfortably but it turned out to be the other way around.”
4. Some of those who invested in alt-coins or ICOs are left hanging
Those who invested in alt coins sold in so-called initial coin offerings (ICOs) are worse for wear.
These coins were promised to serve as payment mechanisms for new software entrepreneurs were building, but it’s months later, the boom has died down, and few companies actually delivered on their promises, rendering the alt coins useless.
So that’s what’s happened after the cryptocurrency boom. Would you still invest in cryptocurrency?
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