Our writer finally sold her Bitcoin but did she make money or did she watch her profit drain away in the plunge?
Last year, I bought Bitcoin. Well, a lot of people did – it’s one of the reasons that it bubbled up from a value of around £600 at the start of 2017 to a peak of almost £13,000 in December.
I bought in spring last year, when the digital currency was at around £2,000 per coin. I sat tight on my investment as new currencies forked off the original Bitcoin, leaving me with a share of Bitcoin Cash and Bitcoin Gold too.
As it rose and rose I read the warnings from other financial journalists, talking about bubbles and tulip mania, and I came very close to losing my nerve.
Once it breached £10,000, I had concerned friends who knew I had invested emailing me to tell me it was time to cash out, that the currency could not possibly retain this kind of value and that I should sell sell sell.
But something – I won’t call it a hunch but I like to think it wasn’t just plain greed – kept me interested. I was wary enough to take out my original investment but then I settled in for what I saw as essentially a free ride.
So… did I lose it all or make a killing?
How I fared
I wish I could take credit for my decisions. I wish I could say it was a clever knack, or that I read the markets or that I had some sort of specialist understanding.
But I didn’t.
Somehow I lost my nerve just a few days before the cryptocurrency began to fall, selling my stake at the peak and netting a pretty decent profit.
I was lucky. I had always seen Bitcoin as a gamble – I wrote a whole article on that topic for loveMONEY back in November.
On this occasion, our gamble paid off and we won. However, quite a lot of people lost considerable amounts by buying at the peak or holding on for too long. Some people will even have lost because they were not ready to sell at the right time.
A quick note on selling Bitcoin: it’s not as easy as buying it. To sell can require you to jump through a number of security hoops that can take longer when more people are trying to register as sellers i.e. when the price is falling.
If you want to be ready to sell at a moment’s notice then it is essential that you register before the event, so that you’re simply ready to push the button when you believe it’s time.
We also struggled to get our pounds out of the online trading platform we used once we had sold our Bitcoin.
Again, there were a high number of transactions and the website couldn’t keep up. We dealt with that by contacting them relentlessly until they released our cash.
I’d strongly recommend you do the same – your money isn’t yours until it’s safely in your bank account.
Crypto-concerns
Bitcoin certainly made some fortunes, it even made the Winklevoss twins into billionaires (for a time at least).
However, there are also tragic stories of people who burned their entire savings or ran up debts on credit cards believing that the currency would continue rocketing ever upwards.
In fact, several credit card companies have now said they will bar customers from using their cards to buy cryptocurrencies.
Lloyds Bank, Bank of Scotland, Halifax, MBNA and Virgin Money all recently banned customers from using their cards to buy into digital currencies and a number of US card providers did the same.
They can’t ban customers from using their debit cards to make such purchases, obviously. However, their message is clear: they are worried that customers are running up debts to chase investment dreams that they don’t think are safe.
Now, I do find that a bit strange. Credit cards can be used to spend money on a lot of things. Frankly, you could max out your card in a nightclub or withdraw money on it and blow it all on coke.
I strongly recommend you don’t (priceless financial advice there – don’t spend money you don’t have on drugs and nights out). However, you can do so using a credit card if you choose to.
Yet you can’t buy cryptocurrencies, unless, presumably, you withdraw cash and pay it into your current account.
However, I can understand why credit card companies have started to ban such transactions. It’s up to them what kind of risks they take and it’s actually not in their interests to help customers get into problematic debt by chasing unrealistic investments.
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Having sold my cryptocurrencies, I’m now curious as to where it will go next. I watch the markets and watch the predictions and fight the urge to reinvest or regret.
If you’re reading this because you’re tempted to invest in Bitcoin or other cryptocurrencies then your takeaway from this shouldn’t be that I made some money so you could too.
My ‘investment’ was a gamble, made with money I could afford to lose. I really mean that; we took our summer holiday budget and sank it into Bitcoin, knowing that if we lost it all then we would just go camping more this year rather than pay for an overseas trip.
Now that you’ve seen how much cryptocurrencies can suddenly slide, you should be even more cautious. Some people bet and lost fortunes in the last few weeks. Fortunes.
So, what do the experts believe Bitcoin and other cryptocurrencies might do in the next few weeks and months?
No crystal balls
We always say that no one has a crystal ball when it comes to investments, base rate, loan rates and so on.
That’s even more true for cryptocurrencies. We’ve never seen anything like this before – the technology is new, the notion of government-free currencies is new, the idea of storing wealth this way is entirely new.
I might say that I don’t know what house prices will do this year, and that’s true. But I can at least look at what they have done over the last years, over the last DECADES, and at least make an informed prediction.
Cryptocurrencies have been around for several years and there have been many ups and downs in their value, but they are still so new that it is hard to make a serious prediction about what might happen next.
At the moment the price of Bitcoin continues to rise and fall, although it has lost more than 50% compared to its peak.
I’m not telling you not to buy it, any more than I would tell you not to buy a ticket for this week’s Euromillions. But I am telling you that I think it’s similarly a gamble, not an investment.
Do it because you have some genuinely spare money and because you can afford a loss. Do it because you’re interested in what might happen to the cryptocurrency markets and you want a personal stake to make it interesting. Do it because you fancy a flutter.
But don’t call it an investment and, for pity's sake, don’t spend money you don’t have or can’t afford to have wiped out if the markets take another plunge.
What do you think? Would you invest in Bitcoin or another cryptocurrency? Have your say using the comments below.