A Year Monitoring Crypto during COVID

[mike]

I got bored during the COVID lockdown(s) so I thought I would set up a fictional investment plan to see what would happen to an investment in a year with COVID.

The presumption is you have $3,000 to invest and you need to make some decent money. Cash investments are low and have almost non-existent returns, the share market needs a long time for investments to provide a decent return, which left crypto currencies with the possibility of strong returns in a short period of time.

Three crypto currencies were chosen as investments of $1,000 each totalling $3,000. The currencies chosen had the attribute that they would be around for a while and not being unduly speculative (a bit of an oxymoron when describing crypto currencies). In terms of crypto currencies they were stable.

The year would be from May 2020 to end of April 2021
The following 7 posts expand on the experiment

 

[mike]

**May to end July 2020**


The initial months did not look promising. A small fictional profit in the first month and then a loss. The overall loss was around 7% before bouncing back with a high gain in July. Overall a gain of around 33% in just three months

 

[mike]

**August to end October 2020**


August showed steady growth. In September there was a significant loss but then in October a rapid gain. Overall it was a positive three months with the fictional investment increasing in value overall by around 36%, an increase of 3% from the previous quarter

 

[mike]

**November 2020 to end January 2021**


Significant increasing gains were made during the months of November and December, more than doubling the initial fictional value.

January saw a wild surge in gains being more in value than the initial fictional investment itself. Over $3,000 gain in just one month.

The fictional investment had now increased by 227% in 9 months with most gains in the last three months.

 

[mike]

**February to end April 2021**


During February the currencies swung wildly, initially almost doubling during the month (comments from Elon Musk) but eventually settling on a relative high growth from the previous month.

March again had rapid growth again being more than the initial fictional investment.
April had even higher growth ending the year with significant fiction profit.

Overall the fictional crypto investment had increased in value by over 540% in just 12 months.

 

[mike]

**Overall performance**

After initial losses and then steady gains the fiction investment surged wildly in the last 6 months of the fictional experiment.

The fictional investment over the year increased in value by over 540%. Yes you read it right, more than 540% increase in value in 12 months. From just an initial $3,000 invested you would now have $19,200. WOW.



 

[mike]

**Conclusion**

Are crypto currencies a good investment? I don’t know. On the surface it would appear so but during the 12 months they did swing wildly around, back and forth during the individual months and were suspect to comments by investors. Certainly nothing like traditional shares. It was a COVID year so I have no idea if this is normal. I have the impression that the crypto currencies can also lose value just as quickly as they have gained it in the 12 months of this experiment.

All I can say if you do invest in crypto currencies ensure you understand all the tax implications and obligations.

It was fun watching the ups and downs during the year

 

[mike]

**Crypto currencies nodes**

In parallel I setup a couple of nodes for two of the currencies, well I did say I was bored :smile:

They were pretty easy to do if you have an IT background. The biggest issue is the initial seeding of the databases. They can take some time to sync and there are obvious significant storage space and Internet connectivity requirements. Once they are set up and initially synchronised the actual upkeep is not all that demanding.

I didn’t really do anything with the nodes other than to keep them up to date and syncing with the relevant networks

 

[TillLindemann]

Very interesting, thanks for sharing.

 

[diedpretty]

**Conclusion**

Are crypto currencies a good investment? I don’t know. On the surface it would appear so but during the 12 months they did swing wildly around, back and forth during the individual months and were suspect to comments by investors. Certainly nothing like traditional shares. It was a COVID year so I have no idea if this is normal. I have the impression that the crypto currencies can also lose value just as quickly as they have gained it in the 12 months of this experiment.

All I can say if you do invest in crypto currencies ensure you understand all the tax implications and obligations.

It was fun watching the ups and downs during the year

They are a good investment. I have owned bitcoin for a couple of years as a long term investment. I also started trading crypto in January this year and am up 36% overall even allowing for the bloodbath that just happened mid April. Like any investment it is all about having a plan and sticking to it. Either purchase and forget and look for long term profits or if trading just use sensible trading techniques and avoid panic buying and selling. The price of crypto fluctuates just like any other investment just that its far more volatile. You are right about the influences that can drive the market. Elon Musk drove down the price of ADA and Ethereum just by saying he thought they were overvalued. Suddenly everyone was selling them and naturally the price took a dive.

 

[finnzo]

A lot more money to be made on crypto compared to the stock market
For any 1 that doesn’t know much about it And has some spare cash to put in
I’d say put split it evenly between etheruem xrp and Bitcoin then don’t check it for 10 years and you will be amazed how much it has grown

 

[diedpretty]

**Crypto currencies nodes**

In parallel I setup a couple of nodes for two of the currencies, well I did say I was bored :smile:

They were pretty easy to do if you have an IT background. The biggest issue is the initial seeding of the databases. They can take some time to sync and there are obvious significant storage space and Internet connectivity requirements. Once they are set up and initially synchronised the actual upkeep is not all that demanding.

I didn’t really do anything with the nodes other than to keep them up to date and syncing with the relevant networks

You could become a miner 

 

[Cultured_Bogan]

**Crypto currencies nodes**

In parallel I setup a couple of nodes for two of the currencies, well I did say I was bored :smile:

They were pretty easy to do if you have an IT background. The biggest issue is the initial seeding of the databases. They can take some time to sync and there are obvious significant storage space and Internet connectivity requirements. Once they are set up and initially synchronised the actual upkeep is not all that demanding.

I didn’t really do anything with the nodes other than to keep them up to date and syncing with the relevant networks


You could become a miner 

I thought mining was at the point where it cost more in power than the return on the bitcoin?

 

[mike]

**Crypto currencies nodes**

In parallel I setup a couple of nodes for two of the currencies, well I did say I was bored :smile:

They were pretty easy to do if you have an IT background. The biggest issue is the initial seeding of the databases. They can take some time to sync and there are obvious significant storage space and Internet connectivity requirements. Once they are set up and initially synchronised the actual upkeep is not all that demanding.

I didn’t really do anything with the nodes other than to keep them up to date and syncing with the relevant networks


You could become a miner 

Nah, don't have the power requirements needed to actually make money mining in my very humble abode. That is all for the big boys now. The days of mining for a profit on a PC are long gone.

 

[diedpretty]

**Crypto currencies nodes**

In parallel I setup a couple of nodes for two of the currencies, well I did say I was bored :smile:

They were pretty easy to do if you have an IT background. The biggest issue is the initial seeding of the databases. They can take some time to sync and there are obvious significant storage space and Internet connectivity requirements. Once they are set up and initially synchronised the actual upkeep is not all that demanding.

I didn’t really do anything with the nodes other than to keep them up to date and syncing with the relevant networks


You could become a miner 

I thought mining was at the point where it cost more in power than the return on the bitcoin?

Yea - you had to be doing it 10 years ago - those that did have made a tidy sum.

 

[jirskyr]

My issue is not whether or not the relative value yo-yos (because I don't invest in crypto anyway) but the question always remains - can you actually exercise your crypto whenever you please?

So if you see a 500% gain on speculative value, can you take that bitcoin and buy a house or a car or simply turn it into old fiat currency? Because I am of the understanding it's not that simple to covert your "gains", in which case it becomes a question of exactly what kind of "profit" you have made.

For example, it's all fine and dandy for the bank to value your house at $X, but another thing entirely to find buyers who agree and will stump up the cash.

My concern is also, if you are more and more exposed to crypto as a means of investment, it is extremely high risk of external influence, as already noted. Some punk can make a twitter comment and half your projected investment value in 1 day. Sure the stock market can do similar things, but at least with stocks you can diversify very broadly and you have some very long-term dependably performing stocks, which themselves are informed by the success of the relative business. And fundamentally, businesses exist to be successful and make profit, so there is an inherent drive within business to succeed, upon which investors can judge whether the expertise/capability/market exists for that success.

For crypto, there are really only a handful of legitimate large players, they absolutely do not have long-term dependable performance and there is no inherent drive for success, except for the hoarding and hyping of existing owners. Crypto doesn't actually exist in any physical capacity, there's no tangible group or person or performance metric driving the crypto values. It's only speculation and FOMO that drives the prices.

So if you have spare 000s you can afford to lose, go for it, but you might as well gamble that money all over the place; hedge your bets.

 

[jirskyr]

**Crypto currencies nodes**

In parallel I setup a couple of nodes for two of the currencies, well I did say I was bored :smile:

They were pretty easy to do if you have an IT background. The biggest issue is the initial seeding of the databases. They can take some time to sync and there are obvious significant storage space and Internet connectivity requirements. Once they are set up and initially synchronised the actual upkeep is not all that demanding.

I didn’t really do anything with the nodes other than to keep them up to date and syncing with the relevant networks


You could become a miner 

I thought mining was at the point where it cost more in power than the return on the bitcoin?


Yea - you had to be doing it 10 years ago - those that did have made a tidy sum.

Same with those who invested in Google, or Microsoft, or Facebook, or even trades on fiat currency rates. If you have the foresight you can make the money very easily.

 

[avocadoontoast]

My issue is not whether or not the relative value yo-yos (because I don't invest in crypto anyway) but the question always remains - can you actually exercise your crypto whenever you please?

So if you see a 500% gain on speculative value, can you take that bitcoin and buy a house or a car or simply turn it into old fiat currency? Because I am of the understanding it's not that simple to covert your "gains", in which case it becomes a question of exactly what kind of "profit" you have made.

For example, it's all fine and dandy for the bank to value your house at $X, but another thing entirely to find buyers who agree and will stump up the cash.

My concern is also, if you are more and more exposed to crypto as a means of investment, it is extremely high risk of external influence, as already noted. Some punk can make a twitter comment and half your projected investment value in 1 day. Sure the stock market can do similar things, but at least with stocks you can diversify very broadly and you have some very long-term dependably performing stocks, which themselves are informed by the success of the relative business. And fundamentally, businesses exist to be successful and make profit, so there is an inherent drive within business to succeed, upon which investors can judge whether the expertise/capability/market exists for that success.

For crypto, there are really only a handful of legitimate large players, they absolutely do not have long-term dependable performance and there is no inherent drive for success, except for the hoarding and hyping of existing owners. Crypto doesn't actually exist in any physical capacity, there's no tangible group or person or performance metric driving the crypto values. It's only speculation and FOMO that drives the prices.

So if you have spare 000s you can afford to lose, go for it, but you might as well gamble that money all over the place; hedge your bets.

You can turn it into fiat very easily on an exchange.c like Binance. Very liquid.

 

[LeichhardtTiger]

My issue is not whether or not the relative value yo-yos (because I don't invest in crypto anyway) but the question always remains - can you actually exercise your crypto whenever you please?

So if you see a 500% gain on speculative value, can you take that bitcoin and buy a house or a car or simply turn it into old fiat currency? Because I am of the understanding it's not that simple to covert your "gains", in which case it becomes a question of exactly what kind of "profit" you have made.

For example, it's all fine and dandy for the bank to value your house at $X, but another thing entirely to find buyers who agree and will stump up the cash.

My concern is also, if you are more and more exposed to crypto as a means of investment, it is extremely high risk of external influence, as already noted. Some punk can make a twitter comment and half your projected investment value in 1 day. Sure the stock market can do similar things, but at least with stocks you can diversify very broadly and you have some very long-term dependably performing stocks, which themselves are informed by the success of the relative business. And fundamentally, businesses exist to be successful and make profit, so there is an inherent drive within business to succeed, upon which investors can judge whether the expertise/capability/market exists for that success.

For crypto, there are really only a handful of legitimate large players, they absolutely do not have long-term dependable performance and there is no inherent drive for success, except for the hoarding and hyping of existing owners. Crypto doesn't actually exist in any physical capacity, there's no tangible group or person or performance metric driving the crypto values. It's only speculation and FOMO that drives the prices.

So if you have spare 000s you can afford to lose, go for it, but you might as well gamble that money all over the place; hedge your bets.

As far as I am aware you can't draw your cryptos down in Australia. I use Coinbase as my wallet and whilst I can buy crypto through them they don't have withdrawal services yet. However, this link, which I have posted previously in a crypto thread, is an Aussie firm that allows you to pay your bills through Bpay or Credit cards and even bank transfers. https://www.livingroomofsatoshi.com/ So I have been watching Foxtel for free since November, paid my gas and electricity bills and my monthly mobile ph account cos I never counted it as real money. Crypto is simply a gamble - only get into it if you can afford to lose some initial outlay. The surge in November mirrored the same growth 2 years ago. Come April 2019 it began to taper off. Is growth sustainable? Boom & Bust is real. A bit like the TIgers Finals drought.

 

[momo_amp_medo]

I buy and sell my Crypto via Kraken app.
All I can say that I invested $5k and (after 12 months of trading) am sitting on more than $15k now.
Better result than Bank interest.
But it’s like playing poker ..... if you can’t risk loosing it all don’t bet.