Cryptocurrency gained a huge momentum in 2017 owing to the exponential rise in bitcoin price. The sudden increase in price made everyone intrigued about the digital currency and consider it as a get rich quick scheme. However, it was not the case when the value of bitcoin and other cryptocurrencies dropped drastically. The price of bitcoin reached its maximum high, crossing $20,000 in mid-December. Then it dropped considerably at the start of this year. The roller costar ride of prices conveyed the true face of cryptocurrencies. Investors began investing in various digital currencies at the same time instead of depending upon only one investment. The constantly changing prices of digital currency also lead to reconsideration of investment strategies. The cryptocurrency is now viewed as a highly volatile asset.
Ethereum Founder Vitalik Buterin outlined that the value of digital currencies can drop abruptly at any time. He wrote on his Twitter account, “Reminder: cryptocurrencies are still a new and hyper-volatile asset class, and could drop to near-zero at any time. Don’t put in more money than you can afford to lose.”
He advised people to invest their life savings into traditional assets, because they are still the safest bet. He also compared the hysterical investments in cryptocurrencies with the record money paid for the “Salvator Mundi”, the world’s most expensive painting by Leonardo Da Vinci. The year 2018 did not begin on a good note for the prices of cryptocurrencies. But after the huge sell-off of bitcoin, it has been showing renewed vigor. According to the industry website Coindesk.com, Bitcoin was trading at $11,451.9 at 6:30 am London time on Tuesday. While Ethereum was trading at $945.55 at the same time.
Ethereum Founder also cautioned people to not trust people that offer cryptocurrency on Twitter by using his name. Scammers have been promoting various offers on the platform. They demand cryptocurrency for a larger amount as compared to the price on the legal exchanges. He advised people to ignore such accounts or offers that lure them into getting more money.
People may stop trusting such fake accounts, but this statement from the founder of a blockchain network lead to right path for the cryptocurrency investors. In the bigger picture, the caution does not affect people at all. They have experienced the volatility in prices and becoming cautious about investments in digital currency. Moreover, tighter regulations and raids of police in some major cryptocurrency exchanges have raised concerns among investors. Many countries have been designing new regulations on cryptocurrencies, while some countries have been pondering on whether to ban them or not. On the other hand, the prominence of cryptocurrencies led to beginning of trading at CME and CBOE.
The announcement from founder of the world’s third popular cryptocurrencies would also win trust of investors as he came clean about the current situation in cryptocurrency industry. Instead of motivating or tricking people to invest in his blockchain platform, he cautioned people about the current market scenario. This enlightenment would lead people to think about how to invest their money wisely. The probability of dropping the price to zero at any time prepares investors to imagine worst case scenario and take further steps. This openness does not lead to distrust in cryptocurrency, but it leads them in the right direction.