My Dive Into Cryptocurrency - Experiencing My First Market Drop

Ah, cryptocurrency - the "magic internet money."

I wanted to get this post out before Christmas. For the uninitiated, cryptocurrency is generally a decentralized digital currency. 'Decentralization' means that no central bank, administrator, or governing body has authority over this currency. You guys probably have heard of Bitcoin and Ethereum to some extent; YouTube has ads everywhere, one of your friends probably preaches about it on their Facebook feed, and certain news outlets report price movements daily. Nowadays, plenty of coins exist on the market to be bought and sold at will - each with their own purpose and endgoal. The Blockchain technology that came with Bitcoin is currently being trialed by international companies, including the Big Four accounting firms, to see if implementation is a good idea. Still, a good number of financial institutions (and people) refuse to touch cryptocurrency because of (1) heavy volatility, and (2) a fear of market manipulation and insider trading.

I wrote a post earlier in the year about day-trading on the stock market. I had some funds in my warchest that I was planning to use for trading, but I figured that since I was willing to risk these funds, I might as well dive into cryptocurrency and see what happens. I was interested in Ethereum instead of Bitcoin - the prospect of smart contracts and decentralized apps suggested greater longevity and utility.

So, on the 4th of December, I bought 20 Ether (ETH) at 480 USD on Gemini Exchange, as recommended by a mentor in the industry. That was 9,600 USD worth, and I was prepared to get out at a loss if necessary. I was also aware of the risk of flash-crashes, hacked exchanges, and anomalies in pricing. Looking back, I consider myself lucky for buying in at that price, because it gave me confidence to hold it through a shaky event that occurred only a few days ago.

In the past week, cryptocurrency holders have experienced a mixture of euphoria and uncertainty. We saw Bitcoin (BTC), the largest coin in terms of market cap, reach a staggering all-time-high of US$19,857 before correcting down to US$11,000+. The entire market fell as well, and Ethereum was no exception. Ethereum hit upwards of 800 USD, before plummeting to 500+ USD. I admit, this was my first rodeo in the crypto world, and it was my first time seeing a correction so rapid and big, but I chose to ride out the storm instead of panic-selling. It wasn't easy to do, seeing your profits go from 60% all the way down to 6% in a heartbeat. During that time, I was scouring the net for news, any news, that could explain the sudden dip.

Credit: coinmarketcap. 

Eventually, the price stabilized, and moved back to the high-600-low-700 range. It was then that I
decided to take profit and move some money out to pay for the first installment of my school fees. So:

I cashed out with a profit of 50.83% on my initial investment, after roughly three weeks. This was an exhilarating experience, overall. However, I still am bullish on Ethereum - it maintains the largest market share for Initial Coin Offerings (ICO) on its blockchain, and CBOE President Chris Concannon has indicated that we might eventually be seeing Ethereum-futures.

Today (24th Dec), the market experienced another slight dip. To that end, I've decided to establish another position in Ether:

We'll see how this goes. I'll look into reserving a spot in my portfolio for cryptocurrency. I plan to hold this going forward into 2018. I'll look at adding more coins to my portfolio soon - I've heard good things about Ripple and Dash.

For those of you who are interested in getting into investing, picking up some technical analysis wouldn't hurt. Also, NEVER trade with money that you cannot afford to lose.

Thanks for reading, guys. Have a Merry Christmas!

Until next time.