The highly volatile nature of cryptocurrency markets makes this industry simultaneously exciting and very risky.
The price of bitcoin rapidly moved from around $600 in November 2016 to an all-time high of nearly $20,000 in December 2017.
Of course, many, due to FOMO, bought Bitcoin worth hundreds to thousands of dollars during the “crypto bubble” period, hoping that the price would “moon”.
It was also in that period that the ICO craze begun. Many novice and experienced investors threw their funds into plenty of ICO projects – both legit and fraudulent. Most of those ICO tokens are worth nothing today.
Sadly, the crypto bull market came crashing down sooner than expected. The price fell from $19,800 in December 2017 to as low as $3,120 in December 2018, reached a year-to-date high of $13,880 in 2019, and is currently struggling around $8,000.
Back to the Present
Although not many people like to admit that they have lost money, whether from buying Bitcoin or altcoins, a recent survey revealed some interesting numbers. They can provide a valuable lesson and a reminder to take extra caution when investing in cryptocurrency.
The survey probed outcomes for crypto HODLers who bought cryptocurrencies between 2017 and 2018.
When asked “How much money did you lose in dollars by buying crypto?”, 54% of the 2,000 surveyed said they had lost less than $10,000. 10% reported losing between $10,000 and $50,000, 6% lost between $51,000 and $100,000, while 15% of the participants admitted to having lost more than $100,000.
The second question was perhaps even more interesting, as it sought to find out how many people had gone into debt from buying cryptocurrencies. Interestingly, 17% admitted to having done so.
Never Risk Funds You Can’t Afford to Lose
Humans, by nature, are emotional creatures, and emotions like greed, FOMO, regret, and even ego and overconfidence affect our thinking, which leads to irrational investment decisions.
One of the first rules of high-risk investments like cryptocurrencies is to risk only amounts affordable to lose completely. Of course, this also includes loans and funds that don’t belong to you. Going into debt as a result of investing in cryptocurrencies is like committing financial suicide.