Currency crisis bytes investors
INVESTORS in cryptocurrencies have lost close to $US450 billion this year in a horror run for the controversial asset class.
In December 2017 the biggest digital currency, Bitcoin, hit a record high, surging to close to $27,000 as a flood of speculative investment fuelled a bubble.
But since then Bitcoin has slumped by more than 80 per cent, with latecomers to the party suffering major losses in a massive destruction of value.
Bitcoin was trading at just $5400 yesterday, but it hasn’t been alone in the sell-off this year, with Ethereum and Ripple’s XRP both down 82 per cent since January.
According to cryptocurrency index CoinMarketCap, the market capitalisation of more than 2000 digital currencies was $US129 billion yesterday, down from $US573 billion at the start of the year.
Increased regulatory scrutiny, fraudulent behaviour and a series of computer hacks have all been blamed for this year’s retreat.
However, many investors dismiss claims that the party is over for crypto-currency, suggesting instead that it’s simply a natural movement in the asset’s economic cycle.
Every Capital director Tom Surman, who is planning to launch a retail crypto fund next year, says it is still a viable investment.
“The hype took the value of crypto through the roof last year, really to unreasonable levels, but likewise we feel certain assets are now undervalued,” he said.
“I would say take the time while the market is down to do your research, understand the tech and think about how it can apply to the real world, and that will probably give you a better footing in the next market run.”