In early December 2017, I bought £ 1,000 of bitcoins when it was $ 12,000 per coin. The value then collapsed and swept away for about three quarters of its value.
I knew it was a speculative episode and at first the pace was good – he ran towards $ 20,000 in the days before Christmas. I thought the only way was.
Why has the price of bitcoin and other large cryptocurrencies fallen? And what should I do – sell now in case you drop further, or keep resisting for a potential rebound?
Bitcoin has entered its last cycle of busts which has seen its value swing around the $ 3300 mark of a coin
Myron Jobson of This is Money answers: When investing, there is the temptation to focus on something that is not experienced and which falls under the "high risk" banner, promising to return an orderly sum if the hype is realized.
Bitcoin was the bet for many novice investors in the period that preceded Christmas last year, when apparently everyone from your dentist to the taxi driver and even your dog were barking on the original and best known cryptocurrency.
But the craze of 2017, which saw the bitcoin price rise to a peak of just $ 20,000 from less than $ 1,000 at the start of the year, has given way to a bust after Christmas.
Apart from some short-lived rallies, bitcoin has been mainly on the slide since.
At the time of writing, bitcoin was worth $ 3,400. This means that it has decreased by almost three quarters of what you paid a year ago and lost 83% from its peak.
And it's not just the bitcoin to endure a torrid 12 months. The price of ethereum has fallen by a staggering 94 percent from its peak of over $ 1,400 in mid-January to $ 88 a coin.
This does not mean that there is no value in cryptocurrencies. Blockchain, the technology behind cryptos is impressive and could become a mainstay in the future.
But the collapse of bitcoin – and other cryptocurrencies – shows that just because something has value does not mean that it can not end up massively overrated and in a bubble.
Many novice investors are likely to have kicked on Christmas Eve and have been badly burned.
Why did the price fall?
This is how long a string question is.
The jury is out of the main cause of falling bitcoin prices.
Greater regulatory control is a reason often cited.
Bitcoin fell 40% a month from its peak in mid-December, while other cryptocurrencies have spilled similar spills due to investor fears that regulators would have repressed their speculation.
Over the course of the year, the currency slipped to a low of $ 5.848 in July, but managed to maintain a relatively stable period between $ 6,000 and $ 7,000 thereafter until October.
Since then, Bitcoin has entered its last cycle of busts, which has seen its value oscillate around $ 3,300 as a sign of a currency.
The so-called cryptocurrency experts attribute some of the blame to the enforcement action by the American Securities and Exchange Commission – financial controller of America – against the start-up companies of cryptocurrency Paragon and AirFox for the sale of securities not registered in November.
The launch of an investigation into the possibility that the tether and cryptocurrency encryption exchange Bitfinex has manipulated the price of bitcoin using unscrupulous and illegal market tricks by the US Department of Justice in the same month probably will also contribute to the crisis.
Furthermore, much of the speculation has focused on bitcoin money – a bitcoin offshoot. Bitcoin money spread in August 2017 to be its cryptocurrency.
However, bitcoin money has now split into two separate currencies that are now effectively competing with each other since last month.
Bitcoin money is now known as bitcoin ABC and the new "fork" is called bitcoin SV.
Should you sell now?
It is difficult to give a definitive answer to this question because cryptocurrencies are relatively new and investment experts are still trends and anomalies of the spot market.
Bitcoin, the best known, was founded a decade ago by a mysterious Satoshi Nakamoto who published a white paper describing an electronic cash system that would give life to bitcoins.
Last year, speculation that the launch of bitcoin futures – contracts for assets purchased at agreed prices but delivered and paid for later – would attract investment from institutional investors triggered the sharp rise in bitcoin prices.
The clamor generated by novice investors and FOMO (fear of losing) has helped to further support the price of bitcoins.
Some analysts say that the price of bitcoins is unlikely as last winter, because stimuli do not seem imminent.
Jason Broomer of Square Mile Investment Consulting & Research gives a more overwhelming rating.
I value the bitcoin at zero and I prefer to invest in Zimbabwe dollars
Jason Broomer – Square Mile Investment Consulting
He said: "I appreciate a bitcoin at zero and would rather invest in Zimbabwe dollars.
"At least the Zimbabwe dollars offer a valuable coating thanks to the credibility of the Government of Zimbabwe, even though here we are talking about a very thin coating.
"There is no way to evaluate bitcoin and price changes simply reflect the supply and demand for speculators and" investors ".
"Gold is equally problematic to evaluate, even if at least gold as a currency has credibility that goes back to the dawn of humanity".
But cryptocurrencies say that emerging technologies that carry radically new ideas will always see the oscillations in their value.
Mati Greenspan, senior market analyst at the eToro investment platform, said: "In the past nine years, the crypto-asset market has recorded five major adjustments with an average decline of 85 percent on average.
Bitcoin has dropped a staggering 83% from its peak of nearly $ 20,000 in mid-December to $ 3,400 (as of December 13)
"On this occasion, for bitcoin record the same decline of 85%, its price is expected to fall to $ 2,950.
"While all eyes have been on the current" winter crypt ", blockchain projects continue to give impetus, institutional interest in crypto-assets continues to grow and technological advances in space are continually being made".
But this point of view is probably autonomous as it derives from a broker analyst who trades cryptocurrency.
Pay attention to panic
There's an interesting discussion on the social media website Reddit about panicking & # 39; on bitcoin in the hope that one day he can recover his losses.
One user wrote: "Panic holds all the way down, yippekayeeeey". Another wrote: "I can not make a loss if you do not sell lol".
Actually, hitting the sales button on an investment is difficult, even if you made a profit for fear of going out before it reaches its maximum.
The reduction of a declining investment is even more difficult as it involves admitting a mistake, renouncing any hope that the call to investment will become good and crystallizing a financial loss.
With conventional stocks and equity investments there are some metrics you can use to help you determine if a stock is a winner or a real disaster, including the price / earnings ratio and the return on equity.
Evaluating bitcoins and other cryptocurrencies does not work the same way, but looking at factors like the number of transactions in a day, the cost of the transaction and the cryptography mining can give you an idea of what they are worth.
This kind of information is not always readily available and you may have to do serious time consuming excavations.
If, after doing your research, you think you made the wrong call on bitcoins, do not wait and make the mistake worse. The best investors will not continue to hold a stake once their mistake is made.
After all, a poor investment that has decreased by a considerable amount is less likely to recover your money than a good investment.
