Well, it didn’t take long to burst my bubble! Since purchasing my Crypto Currencies on the 18th August, I watched excitedly as their value rose steadily, until at one point their combined worth had risen by 21%!
I seriously considered throwing lots more money in, but thankfully caution prevailed!
Early in September the Chinese Government unexpectedly began to clamp down on some facets of Crypto trading and that sent the markets tumbling.
We plummeted into negative territory overnight and I was soon looking at a significant loss. There’s been a small recovery since then but as you can see from the table, I’m some 9% down at the moment!
If history is anything to go by, we can expect more of these fluctuations – there are still too many unknowns and too many conflicting opinions.
Jamie Dimon, CEO of JP Morgan recently called cryptocurrencies a “novelty” and said they are “worth nothing”, whilst Goldman Sachs is reportedly taking market positions on some of them.
We’re certainly still deep in Bubble territory, and it prompted me to look up other bubbles in history.
We’ve all heard of the South Sea Bubble, where executives of the South Sea Trading company spread ‘fake news’, exaggerating their commercial performance in a deliberate attempt to drive their share price up.
Their share price duly rocketed, only to pop a few months later, causing a severe economic crisis.
But who knew about the Dutch Tulip Bubble, some eighty years prior?
Shortly after it was introduced into Europe from what is now Turkey, Dutch high society coveted the Tulip’s exotic beauty and it became a status symbol.
As tulip prices rose to new heights, speculators began to buy tulip bulbs to “flip” later for higher prices and the bubble was born.
Predictably, once the market was saturated, prices began to drop and then crashed, causing a recession that affected the low country for many years.
A more useful comparison perhaps is the great British Railway Bubble of the 1840s.
Shares in the nascent railway companies soared as the rush to build new railways became all consuming.
Sadly, the excitement caused by this then innovative new technology caused thousands of railway miles to be built that were not sustainable.
Predictably (with hindsight anyway!) that train crashed and most of the railway companies went bust.
Nevertheless, bubbles aside, the railways did become a part of everyday life, as did the internet once the dot.com crash had dealt with the early over-exuberance.
In my mind, Crypto currencies will be part our everyday lives within the next ten years.
I don’t think anyone knows exactly how yet, nor do we know which ones will survive of the hundreds that currently exist, but we will be using them.
Next month we’ll look at Blockchain, the technology that underpins these currencies – and has the potential to disrupt many other markets as well.
On August 18th this year, I bought £500 worth each of Bitcoin and Ethereum, a rival currency. As of 25th September, their values were as follows:
If you would like to see a specific topic covered, or would like to discuss how Cryptos could impact or benefit your business, please email me at alan@anflair.com.