Turning A $27,000 Crypto Loss into a Profit
Signing into Robinhood for the first time reminded me of opening a brand new iPhone. The crisp modern look, accent colors in all the right places. The font was cool. The cartoon artwork that ran up and down the screen comforted me as I deposited thousands of dollars from my savings account.
Buying and selling Crypto can feel like a war. Sudden gains followed by equally significant losses makes your heart skip a beat. Add in targeted news stories, algorithmically intended to confirm your deepest desires and draw on your biggest fears, and you don’t know which way is up. Crypto millionaires guarentee ‘Bitcoin to $100,000’ while old geezers like Warren Buffet scoff at the concept of a digital currency. “Don’t invest in something you don’t understand” Buffet has been known to preach.
Somewhere during the Covid pandemic I decided to join the ‘play money’ craze more widely known as ‘Crypto’. I put in a couple thousand dollars into Dodgecoin at 6 cents and to my surprise, only a couple days later it shot up to over 40 cents, giving me over $10,000 in gains.
It was worst thing that could have happened to me, I just didn’t know it yet.
My friend in the next room entered into call and put options while simultaneously Googling what those meant. We were heavy into our day trading career.
A day or so later I cashed out $6,000 dollars from my earnings and decided to go back in with more firepower. Doing the math, I realized that making only $400 per trading day could make you $100,000 a year, which was a desirable number for no other reason than it was long and sounded fun to say out loud. I bought $10,000 in Dodgecoin with the goal of making a quick $500 for the day. Articles flew onto my screen with titles such as ‘Dodgecoin to the Moon!"‘ and ‘Next Stop Dodgecoin to One Dollar’. I was fully confident in my strategy.
The price of Dodgecoin never reached my 51 cent purchase price and as of writing this, is down about 82%. Chasing a quick buck and knowing full well it was headed ‘to the moon’ I patiently waited as my losses totaled a few hundred dollars, $1,000, several thousand dollars - wait here it comes up again!, nope, then finally over $11,000 in losses by the time I sold over a year later. As I finally accepted defeat I was kicked swiftly between the legs on my way down as FTX imploded and drove crypto prices down even further.
All in all, after buying into the market (on Robinhood) with about $50,000 I saw my investment peak at around $81,000 in November 2021 only to fall back down to over $20,000 in losses by November of the following year.
The enormous swings in the crypto world make 5% inflation sound like a dream. Similar to crypto the US currency has the ability to create itself out of thin air in an exponential way. The difference is that the US currency is backed by the United States government. Even with as little faith as you may have in that institution, there is something to be said about an actual institution. Even while Donald Trump was the standing President of the United States and recommending drinking bleach, the US stock market roared like a Ferrari engine. Claiming a democratic ‘blockchain’ of security as the building blocks of the system, we saw how quickly this system could unravel with the loss of over $32 billion dollars in FTX. Literally overnight. The speed of which brings us to one of my main points. Patience, is a virtue.
One of the reasons crypto is typically shunned by the older generations is not because they are grumpy and spend all their time yelling at those damn skateboarders, but because experience will show there is a real beauty in a consistent, albeit, rigged market.
Losing money in the market doesn’t make something a bad investment. Even though the market is a rigged game, you can still make money in the long term, the returns are in black and white. However, putting money into something with no tangible product is stupid. Dodgecoin, is stupid. At its peak, Dodgecoin ballooned to a market cap value over $88 billion dollars. More than Target, Mercedes-Benz, Airbnb, and many other companies that sell real products and services. Riding a wave of Robinhood’s new no-cost platform, free government money flooding the market, and the ever shortening attention spans of those acquiring the first two items - combined with a combustible group of Reddit followers pumping the concept, it exploded. And a lot of people made money! Good for them.
Emotions, fear, lack of security. These things make human beings do unintelligent things. Scams are nothing new, but the reach and believability we see on our phones are seriously hard to unravel. My uncle still clicks on the links for ‘Bigfoot spotted in Manhattan - click here for video’ because it says it! It took time but eventually we found out there is no magic pill, there is no way to sit on the ouch and shake weight your way to a chiseled body, and the guy on Facebook marketplace isn’t going to buy your car for over asking price if you just sent him a quick $50 on Paypal. Crypto, so long as it has absolutely no real life application, is just the latest scam we haven’t caught onto.
The concept of a decentralized financial tool made a lot of sense to me. A way to make transactions on weekends, after hours, and with limited fees is absolutely a need of our global market but this is not currently the reality. You only see Bitcoin ATM’s on the south side of the tracks, they are non in Beverly Hills.
Another huge lesson here for me, having never personally experienced a bubble before, is that you cannot call crypto an ‘investment’.
An investment is technically something you put money into which yields a return. It puts money back into your pocket and there is a real asset behind it.
When all was said and done I pulled every dime out of my account - $30,000. I had lost nearly that same amount to the wind. Or the market. Can you honestly say you even understand what happens in a crypto market transaction? Where does your money ACTUALLY go? You do not know, and that’s the point.
What I do know is 2x4’s and vanities. People need a place to live no matter what is happening out there. I took a $27,000 loss and came up with a plan to make it all back in under a year. It’s not the sexy option but it is what has created more millionaires than any other industry - Real Estate.
How did we turn it into a profit? Coming soon.