Bitcoin Crash: Is It Time To Get Out?

by crypto journalist

Image: iStock

Bitcoin’s crashing and a whole lot of cryptocurrencies are going down with it. Since Monday, we’ve seen $166 billion in market value disappear. Some are calling it a ‘bloodbath’. Is it time to get out?

That’s a real tough question to answer.

The initial idea behind Bitcoin, the ‘first cryptocurrency’, was to provide an alternative to cash that was decentralized, taking power away from the banks and financial institutions. It was born not long after the Global Financial Crisis hit hard in 2008.

In the past year – and probably more accurately, the last three months – Bitcoin’s value has skyrocketed against fiat currencies. This astronomical increase in value resulted in a perfect storm of conditions to push Bitcoin, and cryptocurrencies, into the mainstream. The idea that you could ‘get rich quick’ meant the technology and ideals behind Bitcoin were quickly forgotten.

Everybody took notice without even understanding what cryptocurrency really is.

And now we’re here. The Cryptpocalypse.

Image: Coinmarketcap.com

In the last 24 hours, all cryptocurrency markets are crashing. Hard. Due to falling trade volumes in Asia and the threat of a crackdown on cryptocurrency exchanges, people are cutting their losses. The market is correcting itself.

If you’re holding Bitcoin, or if you recently invested, this graph is worrying.

Image: Investing.com

Should you get out now?

Well, first – Lifehacker is not a professional financial adviser, in any way shape or form. We write stories about ways to make your life easier and those stories sometimes involve money.

Second – it’s nearly impossible to say if you, personally, should sell. You have to weigh up your options. How much did you buy in for? Are you willing to cut your wins/losses and jump out now? Do you understand the technology and believe it will do good or were you just here to make a quick buck? There’s so many questions that are just a matter of perspective. Personally, I’ve seen a huge dip in my cryptocurrency gains and I have only invested tiny, tiny amounts.

Third – it’s a volatile space. One of the issues that the cryptocurrency space is currently dealing with is an influx of fake reports and media that can dramatically alter the price of cryptocurrencies in a matter of hours. Often, this information quickly disseminates through cryptocurrency communities on Twitter and Facebook, which leads to buyer’s selling off and the price dropping – even if the news has been computer-generated by a bot in China. The market is just that volatile. It’s so volatile that since I started writing this article, Bitcoin is already mounting a mini-comeback – up around USD$1000 (and now back down $300 [it never ends!])

Truthfully, we’re seeing all sorts of speculation, refreshing market cap websites, thinking we can see what’s coming or what cryptocurrency will be the next to see meteoric rises, but in reality we’re all just fumbling in the dark, trying to grab onto a wall and find a lightswitch. No one has found the lightswitch. We can’t see what’s going to happen.

The only advice I can really give: Research what you’re getting into. Research. Research. Research.

Before you buy any cryptocurrency: Research.

Jackson Palmer, creator of the ‘joke’ cryptocurrency DogeCoin, penned a long piece about the state of cryptocurrencies on January 12. In the piece he speaks to the idea that cryptocurrencies have deviated greatly from their initial, lofty goals and even speaks about 2017 as ‘the year that cryptocurrency stopped being about technologically innovative peer-to-peer cash and instead essentially became a new, unregulated penny stock market.’

Palmer also mentions the old stock market adage: “When your taxi driver is telling you to buy stock, you know it’s time to sell.”

The fundamental changes we’ve seen in the last month or so – after Bitcoin really skyrocketed – is the adoption of cryptocurrencies for the sake of making money. This has happened in the general population. Some people are buying Bitcoin without ever having read a thing about it. They just don’t want to miss out. The FOMO is real. The hype levels have reached highs that may make even Tulip Mania look stupid in years to come.

But all those people that bought in to make a quick few dollars are selling. They have to get out – they bought high and now their dollars are dwindling as the crash hits. Severely dwindling. If you bought 1 Bitcoin yesterday at $14000, you’ve already lost $3000.

Some will stand to lose a lot of money. That’s why the top post on r/Cryptocurrency is a link to the US Suicide Hotline.

So to answer the question “Is it time to get out?”

The answer is: Nobody knows but you.

And, of course, Nick Kyrgios is still a believer:

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