Duncan* laments the astounding value of his bitcoin holdings at the beginning of this year: “If I had sold everything, I would have had a quarter of a million pounds.”
During the coronavirus outbreak, the 47-year-old former elementary schoolteacher invested heavily in cryptocurrencies, putting his life savings into a portfolio whose value was soaring and which he hoped would enable him to jump on the property ladder.
“I desired to reach $500,000 (£414,000), then withdraw half. “Around Christmas, I had more than $300,000 in my bank account,” Duncan explains.
However, he admits from his home in Edinburgh that he lost nearly all of it in the recent digital asset market crash. He is left with a portfolio worth approximately £4,000 at the time of writing, a fraction of the estimated £40,000 he invested. He remains optimistic: “I have pals who have lost eight-figure sums.”
Duncan is one of an increasing number of British citizens who invest in digital assets. According to research issued by the Financial Conduct Authority (FCA) last year, which is perhaps still the most exhaustive official study of its kind, an estimated 2,3 million persons in the United Kingdom held crypto investments by the beginning of 2021. The number has grown since then.
The FCA stated at the time that the profile of crypto investors was skewed towards men over the age of 35 and from the AB socioeconomic class, with a median holding of approximately £300, indicating that many people had simply “dipped a toe in the water” rather than investing their life savings.
Fewer participants viewed cryptocurrencies as a “gamble” and more viewed them as an alternative to or supplement to conventional investments, according to the findings of the study. The FCA survey, before this year’s worldwide cryptocurrency meltdown, revealed a diminishing degree of awareness, suggesting that some buyers did not completely comprehend what they were purchasing.
Cryptocurrencies, according to Alice Haine, a personal financial analyst at the investment platform Bestinvest, are still emerging as an asset class and are a more speculative investment than investing in stocks.
“The sharp declines in crypto values were in part a reflection of the fact that, unlike equities, retail investors dominate this market,” she explains. “As inflation and recession fears grew, many investors liquidated their assets out of fear of additional price declines as well as to augment their bank accounts and savings accounts to withstand the cost of living issue.
“Any investor contemplating the addition of cryptocurrencies to their portfolio must be aware that the market is extremely volatile, with prices that are frequently unpredictable.”
As the number of small investors increases, the government is amending the law so that advertisements for crypto assets are subject to the same regulations as those for stocks, shares, and insurance products. The measure follows worries regarding deceptive bitcoin advertisements.
MPs on the Treasury select committee have just initiated an investigation into the role of crypto assets in the United Kingdom.
Mel Stride, the committee’s chair, stated last month, “In recent months, the value of the majority of crypto assets has declined considerably.” “We will investigate the benefits and hazards that cryptocurrencies bring, where extra regulation may be necessary, and what the government may learn from other nations.”
A buddy brought bitcoin to Duncan around the beginning of the 2010s when its value was in the low hundreds of dollars. As its price surpassed $10,000 in 2017, he concluded, “This must be a legitimate asset. I must start purchasing it.”
After teaching abroad for nearly a decade, he returned to the United Kingdom in 2014 and discovered that many of his friends had settled down and purchased homes.
“I had been enjoying life and not saving for the future… This was my opportunity to catch up.”
In 2017, he invested £100 “here and there,” but when the market plummeted in 2018, he ceased. “I was still intrigued by crypto and the notion that you could control your financial fate, as opposed to simply attempting to save money.”
In 2019, he resumed investing more frequently, and by the following year, he was setting aside £400 every month. It was becoming a substantial nest egg. His initial purchases were in bitcoin and Ethereum, but in 2021 he purchased “about 2,000” Luna coins, whose value plunged from $85 to below $1 in May.
In crypto circles, the concept of decentralized finance or “Defi” appealed to a worldview molded by the 2008 financial crisis.
“You can do things with Defi that you can’t do in the traditional financial system,” says Duncan, citing the ease of borrowing against cryptocurrencies in comparison to the process of obtaining high street credit.
Duncan acknowledges that he ceased keeping his spreadsheets after achieving success. Even if he had cashed out in April, he would have had a quarter million dollars. “No one predicted it. The opposite is true. People anticipated it, but the bubble I was in did not anticipate it.”
The magnitude of Duncan’s losses was “stressful,” and he has returned to his family’s home. “You are aware that there are varying stages of grieving or whatever… Denial was certainly one of the stages, but then acceptance follows. All the riches I made on paper are gone — that is the past.”
Now he “refuses to sell anything… Because doing so would ensure a loss.”
He no longer teaches and, despite his severe losses, is so sure that the cryptocurrency market will recover that he is pursuing a job in the business.
Ultimately, he asserts, people consistently lose money on the stock market. On social media, common phrases among cryptocurrency investors include “we’re still early” and “WAGMI… We are all going to survive”.
