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Charlie Shrem, Founder of BitInstant: ‘Just Have Fun’ With Crypto Investing

Bitcoin (BTC), Cryptocurrency–Charlie Shrem, Bitcoin advocate and founder of now defunct BitInstant, has some words on the current price volatility of the market and how investors should respond to the constant ebb and flow of cryptocurrency: “Just have fun with it.”

Shrem, who spent one year in prison for charges related to money laundering and aiding and abetting unlicensed money-transmitting in the Silk Road controversy, has been a mainstay in both Bitcoin and cryptocurrency since 2011 when he founded BitInstant, one of the first marketplaces for the purchase of BTC and facilitating BTC-based transactions. While the industry has come a long way since Shrem’s founding of BitInstant and the subsequent fallout that involved the Silk Road court case, he was seen at the time as an innovator in the field, providing users and investors with a more simplistic means for purchasing and using cryptocurrency.

Now, speaking in an interview with Yahoo Finance at the MoneyShow Conference in San Francisco, Shrem shared his feelings towards how investors–particularly those new to the industry–should handle the rampant price volatility that has come to characterize the market. Rather than attempting to day-trade, time the market or stress over the daily price fluctuations, Shrem advocates selecting a high profile project with a large market capitalization and taking a long-term approach. Compared to the myopic view imposed by most of the industry, in particular when it comes to price predictions, Shrem takes a decidedly unique approach to crypto-investing by supporting a long position and holding coins for several years,

“Pick something in the top 10 or 20, and look at those, learn about them, and take a stake in them. Any crypto you’re going to buy, hold for five years. Say, ‘I’m going to lock this, and this money is locked for five years. There’s a high probability you’ll come out ahead in five years, because usually, these bull and bear markets go in two-year cycles.”

Shrem’s method of investing not only avoids creating a daily price-centric view of the industry, but it also provides relief from the masses of investors who track Bitcoin and altcoin pricing hourly through smartphone tickers and coinmarketcap. Shrem’s opinion of crypto-investing also puts more responsibility on the investor for researching their currencies of choice, as opposed to being swayed by the daily fluctuation of the market. Cryptocurrency has been criticized by Warren Buffett in the past as being more similar to gambling than investing given the endemic lack of a diligence that goes into the average asset purchase.

Shrem does contend with the volatility of the market, and how it can backlash despite taking a long-term approach. However, he also believes investors should be more comfortable with the risk of their crypto investment, echoing the typical financial advice to not invest more than a person is willing to lose,

“You’re putting your wealth in these things, and they break. Things happen. The values go down 90%, then the values go up 100%. I always tell people if they want to get into crypto, ‘How much money, if you lost it right now, would you be OK with?’ ‘$500,’ they tell me. So invest $500 in a basket of crypto, and then just have fun with it. Just enjoy it, learn. There’s a lot of good ones: bitcoin, Ethereum, Dash, Litecoin. Just learn what makes them different.”

Shrem also sounds off on the current conversation surrounding a Bitcoin Exchange-traded Fund that has dominated the industry. While he believes a BTC ETF approval by the SEC is eminent, he warns that the industry must prepare itself to handle the responsibility of such a monumental new asset class, stating,

“We only have a ‘first shot’ at it. If we have an ETF, something happens, we get screwed. They shut it down. You know hard it’s going to be to have an ETF again?”

Girl in a jacket

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Bitcoin Price recovers Amidst $15 Billion Cryptocurrency Market Bounce

Bitcoin will likely heave a sigh of relief at the current state of the market. In the last 24 hours, BTC has surged back above $6,500 as the total market capitalization has risen to more than $212 billion.

Bitcoin Back Above $6,500

At press time, BTC was looking set to break the $6,600-mark, trading at $6,581. The top-ranked cryptocurrency seemed doomed to fall below $5,000 after a miserable run since the start of August. Bitcoin has gained more than eight percent in the last 24 hours.

According to eToro senior analyst, Mati Greenspan, the risen for today’s rally can be attributed to a fresh wave of buy-ins. Greenspan opined that once the BTC price fell below $6,000 and seemed destined to test $5,000, more people were incentivized to buy the crypto.

The eToro senior analyst also allayed fears of a crisis saying price fluctuations were a given between $5,000 and $8,000. According to Greenspan:

The range we’ve been watching on bitcoin has been holding rather well. Since the beginning of the year, we’ve seen buyers stepping in about halfway through the $5K handle, which is approximately what analysts estimate is the cost to mine bitcoin.

Ethereum and Other Altcoins Post Massive Price Gains

At the time of writing this article, no coin in the top 100 ranking has a negative 24-hour price change on Coinmarketcap. Ethereum, the second-ranked cryptocurrency is marginally back above the $300 price mark. The price of ETH had briefly slipped below $300 for the first time since November 2017.

ETH leads the way in the top ten coins, increasing by 16 percent as at press time. Other significant gains include XRP – 15 percent, Litecoin – 14 percent, and EOS – 12 percent. Nano, the 43rd-ranked cryptocurrency is the top gainer in the top 100 coins, increasing by 47 percent.

The situation observed today is a pointer to the fact that the market is still closely correlated. Investors going long on Bitcoin sparked a revival in not only the price of BTC but in the market as well. Bitcoin still maintains an over 50 percent dominance of the market which means that it is still the preferred choice of cryptocurrency investors.

Do you think the current cash injection will drive the price of Bitcoin above the $7,000 mark? Keep the conversation going in the comment section below.

Image courtesy of Coinmarketcap.

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Recent Market Drop Reveals Industry Is Entirely Speculative Driven

Cryptocurrency–Confusing is the best word to sum up how the crypto markets have performed over the preceding weeks. Despite the excitement of July and early August’s price rally, a welcome sign in an otherwise severely bearish year, the crypto markets have again failed to hold momentum and slipped backwards. While Bitcoin has managed to sustain above $6000 for the time being, many of the top ten altcoins and beyond have reached all time lows for the year–some of which are approaching their valuation prior to 2017’s end of year explosion.

The result is investors and cryptocurrency enthusiasts left scratching their head and wondering how an investment class that is already eclipsing 90 percent in losses from the beginning of the year can continue to fall.

Some place the blame on the recent emphasis over a Bitcoin Exchange Traded Fund. While ETFs were hardly mentioned during 2017’s bull run (most of the news on that front was consumed with CBOE’s launch of BTC futures) the recent narrative in crypto has approached near obsession over the U.S. Securities and Exchange Commission green-lighting a Bitcoin ETF. The largest proponents of a BTC ETF are the same that continually rally around the “institutional money is coming” slogan, a belief that once Wall Street and other big-capital investors turn their sights to cryptocurrency prices will resume smashing all-time highs. However, the net effect has been an investment base hinging upon news of ETF approval, as opposed to any discussion on the advancement and adoption of cryptocurrency.

While 2017 will be remembered as one of the most bullish crypto markets of all time, 2018 has been far more practical in the sense that crypto’s real world presence is growing. Stories of adoption that are commonplace today would have been celebrated endlessly just twelve months ago. It’s understandable considering the wild price ride to end 2017 brought in a host of new investors–many of which are sitting on >50 percent losses–that are looking to recoup on their investment or find some positive spin on the massive fallout in value. However, speculation alone will not continue to drive the industry. The dot.com bubble never came close to killing the internet, despite the massive amount of capital it flushed down the drain in addition to shuttered companies, because the internet proved itself to be a resilient and necessary technology. Most within the industry of cryptocurrency find similar value in Bitcoin and other projects, it’s just the focus which has shifted away to endless discussion of price.

The Union Bank of Switzerland (UBS) published a report last week concluding that 70 percent of price movements within the crypto markets could be classified as speculative “momentum driven” interest. Value investing has gone out the window as nearly every cryptocurrency community experiences the inverse reaction of positive news being met with declining price. Again, the blame can somewhat be tied to the overall market reliance upon the health of BTC: altcoins rarely hold a standalone impact, and are always at the mercy of the original cryptocurrency when the market turns downward.

But even research into the various technologies, development teams and stories have adoption can be met with a degree of price mockery. To give a recent example, TRON announced a partnership with the world’s leading and most recognizable torrenting service BitTorrent, only to see a decline in price that is 93 percent below January’s all time high. Every currency is suffering, and investors are left with no choice but to try and time the market and cut their losses. However, most of the speculation is being driven by a pan-belief in the declining market. Investors are selling because they believe others will sell and the price will go down, creating a self-fulfilling prophecy that is not indicative of the health of the industry.

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Bitcoin Down 6%, Market Loses $22 Billion in a Day

Bitcoin (BTC), Cryptocurrency–Despite the significant gains Bitcoin and the crypto-markets posted over the weekend, nearly reaching 7000 USD for the first time since last month, 22 billion USD has been wiped from the market capitalization in less than 24 hours.

The rout began with a steady erosion of price throughout most of Monday, before taking a precipitous fall in the early trading hours of Tuesday. Cryptocurrency investors on the East Coast awoke to Bitcoin being down 6 points, with every coin in the top ten approaching or eclipsing double-digit losses (EOS fell the hardest with a 14% price drop as of writing).

While most investors were cautiously watching the market throughout the weekend’s price gains, Monday brought about a number of reports to suggest that the turnaround would be short-lived. Given the relative low trade volume and lack of momentum in the upward price movement, several analysts predicted that the currency would find trouble eclipsing the 7000 USD mark, and that a slide back to 6000 USD levels could be inevitable. Investors responded with a timid day of trading on Monday, seeing almost all currencies fall into a slow erosion of the weekend’s price gains. Early Tuesday morning brought about the precipitous drops that led to the present state of the crypto market, with nearly 23 billion USD taken from the market cap in a number of hours.

CoinTelegraph reports the price fall came in response to several prominent economists voicing their displeasure with cryptocurrency on Monday, going so far as to predict the digital form of money would inevitably fail.  Speaking in an interview with Financial News London, Joseph Stiglitz, Nouriel Roubini and Kenneth Rogoff cite the increased pressure of government regulation as precipitating the downfall of cryptocurrency, stating that no government could continue to allow the “nefarious” activity prompted by the growing industry. In particular, Stiglitz, who holds a Nobel Prize in Economics, posits that the anonymity afforded through Bitcoin (and other cryptos) goes against the virtues of a transparent banking system (the interviewer failed to question the economists on whether HSBC’s billion dollar money laundering of drug cartels qualified as either nefarious or transparent). In addition, the economists conclude that Bitcoin fails to meet the criteria of money, having no intrinsic store of value and too high of a price volatility to be used as a means of exchange.

Other outlets point to the recent hack of decentralized cryptocurrency exchange Bancor as bringing about the lack of confidence in the market (ironically, the funds were stolen just days after Vitalik Buterin called for more decentralized crypto exchanges while slamming the centralized variety).

Tezos (XTZ), which experienced a wild, roller coaster ride of price swings throughout its first week of open market trading, was the only coin in the top 50 to post a percentage gain on the day. However, that came after the currency slid 15 points on Monday, before making a small recovery to 2.18 USD. XTZ is still trading well below the price of pre-exchange listing, when the coin was being speculated with IOUs at a per-coin value of 4 USD. Despite the rest of the market falling, Tezos price volatility is indicative of the market, and investors, attempting to establish a determined value for the project. The currency was originally hailed as one of the most promising projects to come out of crypto in 2017, holding a record-breaking ICO funding of 232 million USD. The subsequent year brought a number of delays to investors being issued their tokens, with several ongoing lawsuits and anecdotes of in-fighting among the team at Tezos causing the investment base to lose confidence in the project.

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