Sky News TV Media Outlet Reports Crypto Investors Losing Homes Due to Bitcoin’s Bear Market
During the bull market experienced by cryptocurrencies in 2017, several individuals and investors placed a lot of money in the market.
Some of them even sold their homes in order to keep investing in Bitcoin and other virtual currencies. Nevertheless, in 2018, cryptocurrencies crashed, making these individuals and investors lose all their funds, at least most of their funds.
In a recent report by Sky News, they mention this issue and how these investors are now ruined. Clearly, the situation can be applied to other markets and assets, not only to virtual currencies. People shouldn’t invest more than what they are able to lose.
The report released reads as follows:
“Married men accessed equity through their family homes, and often – whether because they felt they needed to act quickly to make the most money, or because they feared that their investment would be criticised by their spouses – did so without informing their families, only to see the value of their assets evaporate, followed by their homes.”
Cryptocurrencies are very volatile assets. Indeed, they can fluctuate more than 20% in just a single day. However, this is very risky since individuals entering when the market skyrocketed in 2017 had more chances to lose than win. At that time, several investors were saying that Bitcoin was going to reach $100,000 or even more during 2019.
Several crypto figures such as Vitalik Buterin, the co-founder of Ethereum, or Charlie Lee, the founder of Litecoin (LTC), warned investors about a bear market and fluctuations in the space. Buterin said that it was not an intelligent investment to allocate more than what it is possible to lose in virtual currencies. He said that they can drop down to zero in a short period of time.
Furthermore, Charlie Lee wrote a tweet in which he warns users that they should not invest in Litecoin if they are not able to deal with a 90+ drop. He mentioned that Litecoin could go down to $20. Indeed, Litecoin went down to $23 dollars.
The cryptocurrency market expanded with individuals becoming rich from one day to the other. Several users were commenting about the cars that they were able to purchase with Bitcoin and other virtual currencies. In Japan, for example, the GDP grew 0.3% just because of virtual currencies. Japan is one of the most active countries in the crypto space.
Bear markets and crashes affect individuals all over the world. Back in 2008, when the world financial crisis started, suicide rates substantially increased both in Europe and in the United States. Several investors lost all their savings and funds they had.
It is always important to invest what the investor is able to afford to lose. This would reduce problems if there is a market crash. Cryptocurrencies are an emerging asset class that needs time to mature. The market is yet volatile and we might not see reduced volatility at least for some time.