NZ bitcoin investor sees value crash 32%, says still safer than buying a house
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Loading... - Belle Rolland
- 31 May 2022
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Hamilton-based bitcoin investor Bruno Boni​ has seen the value of his bitcoin and other cryptocurrency investments dive 32% but still believes it is safer than trying to buy a house in New Zealand.
A crypto sell-off resulted in the shedding of more than US$200 billion from the market in a single day, stemming in part from a crash in Terra, a stablecoin which is meant to be protected from volatility.
The price of bitcoin reportedly fell as low US$25,919.33 (NZ$41564.03).
Many Reddit users posted about the consequences of losing their money from their Terra and Luna cryptocurrency investments, with some of them saying they had lost their life savings.
One user said they had lost more than US$450,000 and could not pay the bank. Another user, No-Forever, wrote that they would have made US$25,000 if they had sold the cryptocurrency earlier.
"But I got greedy hoping to get more money so I can at least afford a down payment for a house for my family. I guess no house and savings then."
There was a long list of suicide prevention hotlines posted at the top of the TerraLuna Reddit page – including Australia's LifeLine, and similar organisations from the United States, Britain, Spain, China, Sweden, and 90 other countries.
Local cryptocurrency exchange BitPrime was also caught out by the extreme market volatility, which forced it to suspend trading temporarily.
Safer than a house
In the past five years, Boni saw the price of bitcoin swing between a high of US$69,000 and the current low, but he was not panicking. He and other people saw their bitcoin investments as a hope of one day being able to buy a house, he said.
“At current prices, I have given up on buying a house because in my opinion it’s just too expensive, and the risk of buying a $1 million house which, interest rates going up, it’s just too risky.
“Bitcoin went up to US$69,000, let’s say it goes to US$150,000, let’s say it goes to US$200,000, so maybe one day it can become a down payment for a house.
“This is a sentiment a lot of people have below [the age of] 35, a lot of people just gave up and some of these friends also invest in crypto.”
The loss he had on paper was not too bad compared to the decline in some technology stocks, he said, which were quite closely correlated to cryptocurrencies.
Bitcoin had been around for about 13 years and its reputation was better than that of cryptocurrencies in general, which were seen as a “wild West”, not helped by the most recent collapse of the Terra Luna project, he said.
“Bitcoin is one thing, I think it is pretty safe for people to invest ... but crypto in general you need to be really on top of it, all the time, you really need to know what you’re doing, otherwise it’s really risky.
“It’s very, very easy for you to lose a lot of money if you don’t know what you’re doing.
BitPrime suspends trading
Christchurch-based exchange BitPrime, launched in 2017, said it temporarily suspended trading due to extreme market volatility, which caused it liquidity issues.
The company said it had been hit by a perfect storm where liquidity had reduced, the market had crashed, and its overheads had increased.
"These have eroded trading capital and liquidity to a point where we felt we couldn’t guarantee fast trading execution and liquidity of customer funds."
Its overheads had exceeded earnings for some time, but it was a growth company and had been preparing to raise capital, BitPrime said on its website.
“We’re working hard behind the scenes to recapitalise the business, restore reliable operations and facilitate the company’s future growth."
Crypto-only black swan event
CMC Markets analyst Tina Teng​ said the crypto market collapse on Thursday was triggered by a slump of so-called stablecoin, TerraUSD, which was meant to be linked to the US dollar but which fell 84%, to US9.6 cents in 24 hours.
A related token, Luna, plunged 99% due to the algorithm system’s crash.
“The cryptocurrencies’ crash implies an extreme fear in the financial markets sparked by accelerating rising rates and elevating inflation, which could lead to a global economic recession," Teng said.
People selling out of perceived risky assets sent US stocks to a fresh 13 month-low. Cryptocurrencies followed risk assets, typically technology stocks, to a degree. Read More...
