Keeping cool if the crash of the cryptos comes

NEGATIVE press appears to have caught up with Bitcoin, with the cryptocurrency plummeting below $US7000 ($8900) in value last week, after peaking at close to $US20,000 ($25,380) late last year.

It may be a blip or the bubble may be bursting, but novice investors may just be asking what will become of their money if Bitcoin and other cryptocurrencies come crashing all the way down.

Finder.com.au canvassed 15 economists about the future performance of cryptocurrencies and 60 per cent believed the value of the top five “coins” would fall by 50 per cent in 2018. Currently, Bitcoin, Ethereum, Ripple, Bitcoin Cash and Cardano combine for a total market capitalisation of about $US400 billion, but are viewed with apprehension by some experts, according to Graham Cooke, insights manager at Finder.com.au.

“These cryptocurrencies are volatile, so it’s not surprising some are reluctant about their sustained value,” Mr Cooke said. “However, the future is still exciting for both virtual currencies and the blockchain technology powering it.”

Should the value plunge, David Jackson, founder of Crypto Sydney, said it was important not to panic. “Markets are volatile and the crypto market is still in its infancy. One could say it’s in its adolescence as we see regulatory measures being introduced, which indicates that governments and the financial establishment are taking this market seriously,” Mr Jackson said. “Nobody makes good decisions in a panic, so keep a cool head.” Mr Jackson said that all markets fluctuate. “Some seasoned investors are taking advantage of these fluctuations to buy into particular cryptos when the price falls, if they believe it will recover and rise in the future,” he said.

“But it is vital to research carefully before making any purchase … it’s important to assess whether you can afford to lose your investment before jumping in head-first.”

Finance experts are also concerned about an emerging trend, which has seen some people purchasing Bitcoin with credit cards. World banks are clamping down: British Lloyds Banking Group, US Citigroup, Bank of America and JPMorgan Chase have banned plastic purchases of cryptocurrencies.

Some Australians have already bought Bitcoin on credit and their priority should be managing the fallout of any price plunges, said Andrew Boyd, co-founder of comparison site Credit Card Compare.

“If you are not invested for the long haul and were just looking to make a quick profit, this should be addressed immediately,” Mr Boyd said.