My Experiences Thus Far with Crypto

I have thought that cryptocurrencies were interesting for years now, but I have always been too risk adverse to invest any real money into it, until recently.

Back years ago, I bought three bitcoin for around one hundred dollars. Unfortunately, I wasn’t smart with it and put it on a wallet on the local computer with no backup. Then, when I gave the computer to a friend, I formatted the drive, never thinking about my three bitcoin. With no access to those three bitcoin, they were lost to the ether.

I often think about those three bitcoin and while it would be worth over $100,000 today and more than $150,000 at their highest value. I also know myself and know that I would have sold it when the three coin were worth two hundred dollars, doubling my investment and making me feel like I was smart…

Crypto Access Confusion

So in early April of this year, I decided I wanted to get back into trying to gamble-vest (gamble/invest) into some crypto. My brother had made some crazy twenty-fold gains on a small amount he invested and so I wanted to see some of that too. The market was looking like it was on an uptrend, so I looked into how to get money into crypto.

It was so confusing as I tried some other tools to get money from my bank into a crypto, but most of them didn’t work. The number of steps sometimes felt like I was trying to summon some ancient spirit and would have to perform a few more blood sacrifices to be able to try out this whole crypto thing. It was so annoying, even as someone that’s very tech savvy.

Eventually, I settled on Coinbase (affiliate link), which has pretty high fees compared to some other options, but worked pretty seamlessly with my bank. I started slowly adding fifty dollars here, and one hundred dollars there, and had some early successes in investing in some more “stable” alt-coins. I thought Cardano showed some great potential, as well as Ethereum, a backbone of crypto.

I had heard about people that had invested a thousand dollars and now had accounts worth over one hundred thousand dollars in less than a year. I didn’t need that kind of increase, but the idea of earning some interest beyond what I could see on my few ETFs that I invest in here really drew me in.

Cardano / USDT from April through June

I continued to add more and more money to the account as currencies went up and thought it was super exciting. I watched as some of my early purchases nearly doubled in value, but I wasn’t seeing any of the explosive growth that my brother was seeing with his investments. I wasn’t seeing any three fold or five fold increases, and so I started looking into alternative crypto coins that might have the potential for explosive growth. I wanted that “too the moon” opportunity and feeling that people talk about in the crypto space.

My brother said something that really clicked with me, something along the lines of: “you just need to learn about a coin before it launches, make sure it looks good and invest in it early…”

Refinable wasn’t FINE!

I did a ton of research on coins that were coming out soon, in hopes of finding an initial coin offering that I could make some fast money on. I found one that seemed to be well liked and well talked about called Refinable. It even mentioned that Mr. Beast, a major YouTube personality, was attached to the project. How could it fail? I did research on their whitepaper, and the project looked good to me.

Doing the million steps needed, I got my money set-up with Sushiswap so I could buy Refinable when it launched, so did my brother and his friend. We all wanted to capitalize on this opportunity, and during the launch of the coin, we tried to submit our orders and they kept failing.

We then, without paying much attention, continued to try to jump on the train, only to realize that we were super late and ended up buying at a much higher price than we were hoping. Instead of buying at a price of $0.03 or $0.30 per coin, we bought in at around $4.00 per coin! The price had already gone 100x and we bought at the top!

A few moments later, the value of our investment dropped like a stone. We kept hoping it would bounce and give us an opportunity to break even and get out, but as time went on, it never came close to the price we purchased at, and has only gone down since then, settling at a price of around $0.32 per coin today.

Watching that money evaporate was crushing! I hated that feeling. I have decided not to try to play that game ever again, despite hearing so many success stories from around the web and in some of the chat and communication circles I’m in.

Reducing My Money By Half with Coinbase

But I still had my purchases on Coinbase, and they were still going up, so everything was good, right? Well, one thing that’s not talked about often enough is how correlated most cryptocurrencies are to Bitcoin pricing. In the middle of May, Bitcoin started dropping like a stone and dragging all the other currencies with it.

Bitcoin Drop from Mid-May to Third Week in June

I watched as the small potential gains that I had seen not only vanished but started turning into unrealized losses. I watched as all of my purchases dropped in value by almost fifty percent! So disheartening!

There are still conversations about the price of Bitcoin dropping further towards $20,000 per coin, which would mean my gamble in crypto will drop to a third of the value it once was.

To me it felt like the joke that people sometimes make about all kinds of money losing enterprises.

“How do you get a wallet with a million dollars worth of Crypto?

“I don’t know… how?”

“Buy two million dollars worth and wait.”

I try to avoid the words “investment” or “investing” because the market is so speculative and often lacks any true fundamental support from a product or service to provide it value.

People talk about bull markets and bear markets and different movements and patterns but all it takes is some fear in the market spurred by a message on Twitter from Elon Musk and the market tanks. The sustained drop is unlikely due to the original event, but it seems to have kicked off this whole downward trend that I now feel trapped in for however long it goes.

Some people are saying it will take a year or more to see Bitcoin get back to its previous high, and hopefully pull the alt-coins back up with it. There are predictions of Bitcoin rising in price back to previous highs in a week and some saying that it will never happen, so it’s hard to know exactly what the future holds.

Before all of this craziness with the price drop happened, I had already started to ask myself how I could make some money despite the volatility. If I could figure out when to buy low and sell high then it wouldn’t matter where the overall market is, right?

3Commas: Bot Help?

So I know you shouldn’t time the market, but there is so much volatility in different cryptocurrencies with most moving more than a percent or two per day, and I wondered what would happen if I could just take a bit of money and earn even a quarter of a percent each day, compounded over a long period of time. Maybe then I could have a million dollars, right?

$500 at 0.25% interest per day, compounded monthly with $500 added each month for 6 years = $1.3 million dollars!

I started doing research on trading bots and found 3Commas (referral link), where I signed up for their free account, put a bit of money in, set up a bot based on settings I had seen others use, and let it start working.

The idea was simple enough, the bot could look for signals in the volatility to buy in and if it made a mistake and the prices went down, purchasing more using a technique called dollar cost averaging as the price went down could allow me to exit positions relatively easily. Well, as long as the prices stayed within a certain range. With this strategy, I would earn a small amount of money each day.

One cool thing about 3Commas is that you can copy other people’s bots, including ones that have already proven their worth in the last month. It was so exciting to see bots with twenty-percent or more profit in the last month. I wanted to copy and run all of those bots, but I also knew that I didn’t have the capital or the understanding to do that.

3Commas Bots, many available to copy and use!

And at first, it seemed to be doing great! I was earning between two-tenths of a percent and half a percent per day. The bot was doing two or three trades in a day, with each one earning a few cents to as much as half a dollar after paying the trading fees. I was happy and excited again.

But, unfortunately, all of this was before the big drop in Bitcoin price that I mentioned above, and now the money that I’ve given the bot to use is wrapped up in a trade that shows no sign of exiting any time soon, and so for now I have more unrealized losses on my account.

Today’s Final Thoughts

It’s hard not to feel pretty defeated at this point. Every move I’ve made in this space has currently lost me money. I still think that over time, some of this might turn around.

I sold out of that horrible mistake I made with the initial coin offering, so that coin will never make me back what I put into it, but other crypto I’ve purchased might go back up over time, and if more of them go up than go down, then I might come out ahead.

Eventually, my bot will likely exit out of those trades, freeing up that capital to start trading again and making a few pennies here and there. I might add more to it as well to either try to help free up that capital faster or to give to the bot to make new trades. I’ve learned a ton about how to best set up my trading bot and have even worked on some back testing analysis to see what I could have done to better handle the extreme volatility that we’ve recently experienced and have made notes and adjustments for the future. Maybe, eventually, this could be a way for me to earn some decent returns on crypto, but I have a huge learning curve still to get over before I’ll have any idea for sure.

I also don’t know if I’ll do much more buying and holding of coins over the long term because I feel that I don’t have any good sense or understanding of which coins might someday be worth a ton of money or when best to buy or sell those coins to take profit and actually have monetary gains, so I might lock down my current coins, pull them out of Coinbase and into somewhere else, maybe stake them somewhere to earn a few percent interest, and leave them until they get above the value I purchased them at.

Overall, I am still hopeful that this style of “investing” will contribute someday to a better life for my family, but it might be more of a part of my overall retirement plan rather than some kind of early financial independence option. I hear a lot of different organizations and investment groups are putting a small amount of their capital into crypto as a replacement for bonds. I’m interested in learning more and will continue to research and revise and if anything amazing happens, I’ll let you all know how it goes!

YouTubers I Watch in the Crypto Space

In no particular order:

3 comments

Add Yours
  1. Stargrace

    I bought some Ether and dodge when it was low, tripled what I put in (which wasn’t that much) and then decided to get out. Instead I read a bunch of books including ‘Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School” which actually presented things in a really clear and easy to understand way for once.

    I think actively TRYING to be first (first to find the next bitcoin, first to catch this, first to do this) is a lot of the issue. It rarely ever happens that way by actual chance.

    • Stargrace

      I meant to say that instead of investing in cryptocurrency, I switched to Index Funds, which have super low costs, and spread out through a whole bunch of global companies instead of just one focus. Lower risk, potentially smaller gains, but the average return is around 10% and I’m OK building that up over years.

      • Malcolm Peralty

        Totally get that and I have some index ETFs as well as well as some ETF Bond funds and one or two stocks. I am all about diversification, though it means that my average return is lower because I’m so risk adverse. 🙂

        I definitely won’t be chasing the “next cool crypto” though. Just hurts too much when I get it wrong.

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