Cryptocurrency Crash

I'm not a crypto fan but if anyone thinks Gold is a good investment you really need to do some research.

For starters go on Youtube and search for Warren Buffetts, John Bogle and Ben Felix views and stats on Gold vs The Stockmarket.

 
My Bro in law runs a small, friends only investment group. He’s done it for years, started when he was in banking, with a group of friends there, and carried it on when he left. They even got through the crash ok.
They would never touch crypto at all.
 
I invested a total of £200 in crypto (no SBF me like 😁) just to see how it went and I'm about £60 down.
I'm actually in profit on my Ethereum, but my Cardano and Polygon are dragging it down.
Feel sorry for those who've lost out big time, some of the profits being made were so tempting that the fomo must have been horrendous if you were of a particular personality type.
 
I do know Gordon Brown sold a lot of the UK Gold reserves @ $250 an ounce in 2001 - 22 years on an ounce of Gold is $1926 an ounce - thats a near 8 fold return 800% - property is up about 100% in the same period and shares up about 50%, the same for cash on deposit. The gain on gold is even bigger in pounds. i am not a massive gold fan, but its been a very good investment over the last 22 years.
 
Cardiffdaffs said:
Interesting article about FTC and which was seen as a safe home to invest in crypto. It went bust under major allegations of fraud and ponzi scheme characteristics and thousands are out of pocket. Social media influencers and celebrities like Larry David persuaded people to buy and are now being sued.

How the fall of the 'King of Crypto' cost one British man millions https://www.bbc.co.uk/news/technology-66892685
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This is the big problem with crypto. The major governments see it as a threat and so they won't legitimise it by regulating the trading of it like they do with other securities. They will tax you if you win big but they won't protect you if someone steals it. FTX, and other exchanges, have been able to grow and position themselves like banks but without the regulations that go with it. Bitcoin, or other cryptos, weren't the problem here but fraudulent behaviour by a business acting like something that it wasn't. If you owned Bitcoin before FTX then you still own it now. If you gave £1m of Bitcoin to FTX then they were selling it to other people while still showing your account as holding £1m of Bitcoin. Banks do this all the time with fiat money but the system allows it because you can create more. That's not the way with Bitcoin. Bitcoin's supply is finite so if they don't have the funds to cover every single Bitcoin deposit then they are fraudulently creating something that doesn't exist. As long as everyone doesn't attempt to withdraw it there is no problem but as soon as anyone finds out the pack of cards collapses because they can't give everyone something that doesn't exist.

The solution to this is fairly simple and that is to maintain a balance to cover all withdrawals and regulation and auditing will allow that to work. The problem is without that regulation then greedy people like Bankman-Fried will try and get away with stuff like this.
 
Watched this last night just by chance. It's about how FTX got started all the way to its crash. As a person having no interest in crypto from day 1 I still found it a really good explanation of who were the players and why it went wrong

 
I bought just over £50 worth to pay for IPTV a couple of years ago. The little bit left over now appears to be worth just over £31. That will go a long way towards my next sub!
 
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Zoophonic said:
I am far too old and wizzened to want to invest in high risk assets. Im at the stage where low risk, low growth assets as part of my retirement portfolio do me fine. My pension pot grew 14% in 2021 which is great. It will probably lose 4% this year but that is perfectly acceptable and boring.

It helps me sleep well.
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The older I get, the higher risk gets more interesting. Think about it
 
I’be thought of a new system - I’m going to call it bartering, and there’s no actual “money” involved 😀
 
sweet_left_foot said:
The older I get, the higher risk gets more interesting. Think about it
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Any investor with a proven track record would advise you take less risk, the older you get, if you're investing over a long time frame, with a portfolio which contains a large chunk of your wealth.
 
Interesting that this has gone up again, seemingly just because of the halving (which everyone with major stakes in knew was coming), yet it's seemingly no further forward in being used in day to day life.

I still wouldn't advise a novice to be touching any or much crypto with a barge pole mind, especially not after a rally. I've <1% of my investments in it, as part of following some traders on eTorro, but that's pretty much gambling/ very high risk. I think they only buy when it's below the 200-300 day moving average mind, so I'm not fussed about that.

For anyone who got in before the rise, fair play, but this might be a good time to get out, as all the talk of the halving (and every halving) to me just seems like marketing, to bring in new buyers again and temporarily jack the price up, so the big guys can cash in again.
 
The younger you are the more you should be in Attack mode.

The market goes up on average 3 years out of 4.

Bull markets last on average over 5 years.

Bear markets around 18 months.

Bull markets make you money. Bear markets make you rich.

The younger you start the more time you have and time smooths out volatility (if in doubt zoom out).

The older you get and the more you've made the more you should to switch to defensive mode (but that doesn't mean going all to cash).

The mistake I see time and time again in my 30 odd years of investing are new investors who only put money in when everything is going up. This is like going to your favourite shop and buying more and more every time prices go up.
It makes no sense.

Then people see the slightest paper loss and panic sell.

For most a total market index fund will do the job.

If you set and forget one of those then over 20 years you will outperform around 90% of traders, stock pickers and even fund managers.

Personally I 85% index and have 15% "hot sauce" (such as Bitcoin).

Time is your friend.
The longer you can sit on your hands and do nothing the better.

 
Andy_W said:
Interesting that this has gone up again, seemingly just because of the halving (which everyone with major stakes in knew was coming), yet it's seemingly no further forward in being used in day to day life.

I still wouldn't advise a novice to be touching any or much crypto with a barge pole mind, especially not after a rally. I've <1% of my investments in it, as part of following some traders on eTorro, but that's pretty much gambling/ very high risk. I think they only buy when it's below the 200-300 day moving average mind, so I'm not fussed about that.

For anyone who got in before the rise, fair play, but this might be a good time to get out, as all the talk of the halving (and every halving) to me just seems like marketing, to bring in new buyers again and temporarily jack the price up, so the big guys can cash in again.
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Not the halving.

About 6 weeks ago around 10 ETFs were approved in the U.S.

Now the likes of Blackrock who run these ETFs are buying up as many BTC as they can like a manic hungry Pacman.

This has caused Bitcoin to go mainstream and there is not enough supply to meet demand, and of course naive newbies only buy when the price is going up.
 
Andy_W said:
Interesting that this has gone up again, seemingly just because of the halving (which everyone with major stakes in knew was coming), yet it's seemingly no further forward in being used in day to day life.

I still wouldn't advise a novice to be touching any or much crypto with a barge pole mind, especially not after a rally. I've <1% of my investments in it, as part of following some traders on eTorro, but that's pretty much gambling/ very high risk. I think they only buy when it's below the 200-300 day moving average mind, so I'm not fussed about that.

For anyone who got in before the rise, fair play, but this might be a good time to get out, as all the talk of the halving (and every halving) to me just seems like marketing, to bring in new buyers again and temporarily jack the price up, so the big guys can cash in again.
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It's not going up just because of the halving. That hasn't happened yet. It is going up because of the ETFs that have been approved in the US. If the investment companies want to have an ETF with Bitcoin as the underlying asset then they have to own that underlying asset so all the institutional investors having to purchase has been driving the price up. The halving is/will have an effect but it isn't marketing. The miners need a return on their investment or they won't mine and the halving means that only half the reward for mining each block is given so for them to get a return on their investment they need to sell at a higher price. It is just basic supply and demand because the amount of bitcoin available "for sale" is reduced which pushes the price up.

Andy_W said:
Any investor with a proven track record would advise you take less risk, the older you get, if you're investing over a long time frame, with a portfolio which contains a large chunk of your wealth.
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It's not to do with age, it's to do with liquidising the investment. The closer you are to needing to convert into cash for a specific thing (and can't ride out peaks and troughs) then the less volatility you want for predictability. If you aren't planning on liquidating your assets and they are just going to be passed on via your estate then the level of risk is less important.
 
Recommended Reading/YouTube Videos to become a better investor:

Stocks:
Any book/video from: Warren Buffett, Charlie Munger, Howard Marks, Peter Lynch, Seth Klarman, Richard Thaler

Ben Felix videos are Excellent.

Crypto:

Stay away from anyone who say with certainty they know how the market is going to go.
NO ONE KNOWS ANYTHING.

But Ben Cowen is pretty good, as is Bob Loukas. Aimstone worth a watch.

For data, follow Glassnode and Look into Bitcoin channels.

Portfolio construction:

The more volatile an asset the more likely you are to sell when it goes down.
So even if you think that asset will outperform everything else over the long term putting all your money into is a terrible idea as you will likely panic sell at some point, or an unexpected bill will arrive and you will need to sell when the market is down.
If you had held Amazon over the last 30 years you would have done well but it has crashed 90% in that time twice.
Not many have the fortitude to hold when that happens.

So the more upside a volatile asset has the less you need of it.
Not only will you sleep better at night but when the volatile asset rips to the upside you don't need much of it
in your portfolio to make a nice difference and to be able to outperform the market.

So (not advice):

Think of something like:

80% Total market Index Fund.
15% Nasdaq
3% Bitcoin

2% in a one or two stocks or other cryptos for fun to see if are any good at stock/cryptos picking.

Maybe have a bit of small cap value fund in there as that tends to outperform in certain times.
 
This is the reason I made a very very small investment in the crypto world.
For years I had been spending too much money on scratch cards and I had enough of it I couldn't go into a shop without buying one. I don't know whether I had a gambling addiction or not but I was spending too much on them. I decided to stop so a bit like using a vape to stop smoking I put £30 in coin base got the freebies and then withdrew £20. I ended up with 1.2m shib and a couple of other coins. Since then I haven't put another penny into my coin base account I have swapped and traded coins on there so I now have 900 flare tokens and still my 1.2m shib tokens(it's worth about £70 today for both). That was over a year ago now and I haven't bought A single scratch card or placed a single bet. If I think about gambling then I just look at my coin base account and see if it has went up or down. This probably wasn't the right way or the best way to go about things but it has worked for me in the way I wanted it too.
 
BTW - I would advise diversification in any investment strategy.

Some property - at least your own house
Some shares - at least 30%
Some fixed cash/bonds - at least 20%
Some gold at least 5%

on top of a decent pension plan.

The issue is introducing some crytocurrenucy say by splitting gold/crypto allocation - personally I would keep crypto to 0% to 2%

I see some people are charging in with most of their investment funds into crypto, because it has done so well of late. If you make a profit take the initial investment out, so its impossible to lose, as one day there could be a big fall as Crypto's value is built almost all on pure speculation.
 
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