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When should you stop buying bitcoins?

Times are tough for cryptocurrencies. Their prices are roughly at the same level as at the end of 2020, a time that now seems very distant. The exchange platforms that invite the public to buy and sell them are laying off en masse, while prices are collapsing; in some cases, they even prevent customers from making withdrawals. Their stablecoins are more stable than name.

One of the arguments in favor of cryptocurrencies was that they were to some extent immune to the manipulations and corruption of the traditional financial system. However, it turns out that insider trading is a practice that is also rampant among employees of blockchain companies. Enough to fuel the wave of criticism that is falling on the crypto ecosystem.

I will not launch into predictions on cryptocurrencies, even if the scenario of the financial abyss seems to me more likely than that of the currency of the future. On the other hand, we know, almost to the nearest dollar, where the investments of those (the hodlers) who entered the race at different periods and who kept their cryptocurrencies during this turbulent year are. If you are the President of El Salvador or the Mayor of New York, your crypto bet has gone bad. What if you’re neither, but just decided to buy bitcoin at some point in the last decade?

Bitcoin is the most popular cryptocurrency, and $1,000 [environ 959 euros, ndlr] is a round and convenient number. So here’s where a $1,000 bitcoin investment made on different dates would be today (referring to end-of-day prices, because bitcoin doesn’t strictly speaking “close” like a stock).

For this exercise, we will take the “current” price of bitcoin on Tuesday, June 21 at 3:30 p.m. EST: $21,153, knowing that it will have changed a little when you have finished reading this article. Here’s a chart tracing bitcoin’s price action since 2014, and another that covers its early years. And here is a page of bags, which I’m sure will appeal to “bag holders”. (These prices are not adjusted for inflation, but you will see that adjusting for inflation would not change the general course of the story that follows).

If you have invested…

May 22, 2010: well, your $1,000 pays you big today

We begin our timeline one year after bitcoin was created. May 22, 2010 is the day someone paid 10,000 bitcoins for two pizzas – and the birth date of Bitcoin Pizza Day. Since the pizzas cost around $41, the value of bitcoin in this exchange was $0.004. Based on this value, which was in no way real – other than because someone agreed to attribute it to pizzas – $1,000 worth of bitcoins at the time would have a theoretical value of more than 5 billions of dollars now.

Back then, bitcoin wasn’t as easy to trade as it is today, partly because there weren’t little stock charts to tell you exactly how much it’s worth. They would have been a great help to our pizza buyer, who is making us laugh today because he left hundreds of millions of dollars in actual bitcoin present value…

November 28, 2012: $1,705,887

Before they can be bought and sold, bitcoins must be mined. In November 2012, the bitcoin reward for mining a block on the blockchain was halved, which reduced the supply of new bitcoins in circulation and resulted in a rise in price. This is a mechanism that, approximately every four years, makes bitcoins rarer and, therefore, more expensive.

In the year following this first reduction (“halving”), the price rose from 12 to more than 1,200 dollars. If you invested $1,000 in bitcoins on the day of the halving (at $12) and held on to them, you are at the head of $1.7 million in June 2022.

February 7, 2014: $29,379 / February 25, 2014: $41,074

Mt. Gox was a Japan-based cryptocurrency exchange that handled most bitcoin transactions globally in the early 2010s. In late February 2014, one or more hackers stole some 700,000 bitcoins from the platform, and price of a bitcoin went from around $800 to under $600 (and even, briefly, much less).

Perhaps the oldest philosophical dispute in the bitcoin world is the one over block size.

What shake the confidence of users, even if today, we can see a good example of buying down. Either way, a $1,000 investment in bitcoin, even before this drop in price would still bring in a hell of a lot right now. But not as much as an investment made at the end of that month.

June 17, 2016: $28,245 / July 9, 2016: $32,495

The summer of 2016 was marked by several notable events. First, another major theft, which resulted in the loss of over $50 million in digital money, this time in ether (not bitcoin). Then came the second halving, which again reduced the supply of new bitcoins in circulation around the world.

During these months, various people found ample reason to be wary of cryptocurrencies – we do not like to lose 50 million dollars at once – at the same time as the scarcity pushed them to buy them anyway. But no matter, if you bought that summer, you still had the baraka.

1er September 2017: $4,324

Perhaps the oldest philosophical dispute in the bitcoin world is the one over block size. On one side are the real believers (like the creator of the currency, known as Satoshi Nakamoto) who believe bitcoin is the global currency of the future and should be used for everyday transactions. On the other side are the enthusiasts who see bitcoin as an investment vehicle and a store of value.

In 2017, the pro-everyday transaction group formed Bitcoin Cash, a spin-off cryptocurrency that comes from larger blockchain blocks, to accommodate and validate more transactions in less time. The introduction of Bitcoin Cash did not dampen the rise of regular bitcoin. In fact, the price of the latter skyrocketed in 2017, before a precipitous drop in 2018. It was a good time to get started.

May 11, 2020: $2,459

Right after the start of the pandemic, a new halving further reduced the introduction of new bitcoins into the market. A year later, the price of BTC had fallen from $8,601 to $56,704 and 57 cents. The halving probably helped, although the effect wasn’t immediate. It was the pandemic that played a major role, prompting many people confined to their homes to invest the income they had in stocks or more speculative activities, such as cryptocurrencies and betting on the presidential election. [américaine]. These gains have not been erased, but wait a bit.

November 6, 2020: $1,359

The speculative mood continued throughout 2020, marked by the election and the ongoing pandemic. On November 6, in the midst of the counting period, the price of a bitcoin reached $15,565 and 88 cents, en route to the much higher highs it would reach in the spring and then the fall of 2021.

January 28, 2021: $632

If you were in front of your screen in January 2021 and witnessed the take-off of stocks like GameStop and AMC – a take-off apparently only motivated by the enthusiasm of Internet users who had mobilized to buy them en masse in order to trap short sellers – you may have wanted to try other unconventional investments. The story that made the biggest impression during these few days was that of dogecoin, which experienced a rapid rise followed by an equally dazzling fall. If the unbridled optimism of those decisive days had led you to spend $1,000 in bitcoins, you would have lost 38% of that bet.

April 14, 2021: $335

Coinbase’s IPO in the spring of 2021 was hailed as a pivotal moment, which cemented the integration of crypto into the traditional world of finance. Not only was Coinbase a large and renowned platform, but the way it operated (tiered fees based on crypto trading volume) established a fairly direct relationship between the company’s bottom line and the prices of the cryptocurrencies themselves.

Today, the company that launched the first such fund offers clients to bet against crypto.

The company’s stock started at $381 and climbed higher that day before closing lower. This week, you could buy a Coinbase share for around $57. After hitting over $63,000, bitcoin has seen only a moderate drop since the launch of Coinbase by comparison.

October 19, 2021: $329

In October 2021, the launch of the first cryptocurrency exchange-traded funds marked a new rapprochement with the old world of business. Today, the company that launched the first such fund offers clients to bet versus crypto, which might be a more appealing idea at the moment.

November 16, 2021: $352

It was announced that day that the Staples Center, the iconic venue in Los Angeles that hosts the Lakers and Kings as well as major events like the Grammy Awards, would be renamed. It would now be called Crypto.com Arena, part of a sports sponsorship gold rush that will not stop with the recent recession.

February 13, 2022: $501

If you’re a football fan, what you probably remembered from the Super Bowl between the Los Angeles Rams and the Cincinnati Bengals was Aaron Donald’s superiority on the Bengals offensive line and his heroic passing game. by Matthew Stafford and Cooper Kupp.

For some bitcoin competitors, the situation has already been more serious.

If you’re less of a football fan, you’ll mostly remember the halftime show or the flashy crypto ads, including one in which a floating QR code invited people to sign up for a Coinbase account. and get free bitcoins, and another in which Larry David was humorously promoting FTX. These and other advertisements have prompted huge numbers of people to download cryptocurrency exchange apps and, one imagines, to invest.

Either way, one bitcoin was worth $42,197 on Super Bowl night. In a way, a 50% loss in four months is tough. In another sense, for some bitcoin competitors, the situation has already been worse.

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