Drop in Bitcoin might be a good thing - Economist
Economist Dawie Roodt believes the recent drop in the cryptocurrency Bitcoin might be a good thing.
“It teaches people to be careful and that this cannot only go up‚ but that this can come down‚ and come down a lot‚ as well.”
Bitcoin hit a four-week low on Tuesday after dropping by 14% and is currently down more than 40% from its record highs in mid-December.
Reuters reported this comes amid fears of a regulatory crackdown after reports that South Korea’s finance minister Kim Dong-yeon had said banning trading in cryptocurrencies was still an option.
South Korean news website Yonhap reported that Dong-yeon told a local radio station that the government would be coming up with a set of measures to clamp down on the “irrational” cryptocurrency investment craze.
Roodt believes the drop can also be attributed to the public spending extra time and money over the December holidays on cryptocurrencies.
“It was the man on the street that drove up the price of Bitcoin.”
Roodt believes the interest subsided with the start of the new year.
“This does not mean it is the end of cryptocurrencies‚” Roodt said.
“Bitcoin is becoming is becoming more formalised … It means the volatility should become theoretically less.”
Roodt encouraged the public to buy Bitcoin or other cryptocurrencies such as Ethereum despite their fluctuations.
“Don’t see it as a money-making opportunity. See it as an opportunity to learn a new technology.”
A Durban auditor said that while he was concerned that the value of some cryptocurrencies‚ including Bitcoin‚ had plummeted‚ it was “just a correction”.
“They have all been doing so well‚ and at some point they need to correct. I’m a buy-and-hold guy‚ so I have just been buying but not selling. I do feel cryptocurrencies are the future so I actually think it is early days.”
One of the cryptocurrencies he bought into‚ Ripple‚ had shown massive growth‚ but was declining.
"Yes‚ Ripple was up more than 1‚000% in about a month-and-a-half but that will never be sustainable. So of course it will come down. I see these downturns as buying opportunities. But the big question is: Where is the bottom?”
Another buyer said he was worried about the decline‚ having lost money on some of his cryptocurrency investments.
“First of all‚ I feel like I got into cryptos way to late. I started dabbling in them in December 2017 when Bitcoin was spiking. Initially I made a decent bit of money‚ until I started trading because I was greedy. It’s just so difficult to predict when the price fluctuation is going to take place. I was planning on buying low and selling high which‚ to the beginner‚ is a no brainer because it makes perfect sense. But I was just too impatient and didn’t wait long enough for the price to pick up or to drop low enough.”
Because of this‚ he lost some money on Bitcoin and decided to buy into Etherium.
“I traded all my Bitcoin for Etherium. Once again‚ I initially made up all the money I lost with bitcoin. But then today [Tuesday] it’s dropped something crazy like 16%. Dammmmmmmmit. Now I am just going to hold onto the Etherium I have and hope it picks up over the next few years‚” he said in a text message.