NZ Bitcoin investor sees value crash 32%, says still safer than buying a house

Hamilton-based Bitcoin investor Bruno Boni​ has seen the value of his Bitcoin and other cryptocurrency investments dive 32% but still believes it is safer than trying to buy a house in New Zealand.

A crypto sell-off has resulted in the shedding of more than US$200 billion from the market in a single day, stemming in part from a crash in Terra, a stablecoin which is meant to be protected from volatility.

The price of bitcoin reportedly fell as low US$25,919.33 (NZ$41564.03).

Many Reddit users were posting stories about the consequences of losing their money from their Terra and Luna cryptocurrency investments, with some of them saying they had lost their life savings.

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One user said they had lost more than US$450,000 and could not pay the bank. Another user, No-Forever, wrote that they would have made US$25,000 if they had sold the cryptocurrency earlier.

“But I got greedy hoping to get more money so I can at least afford a down payment for a house for my family. I guess no house and savings then.”

There was a long list of suicide prevention hotlines posted at the top of the TerraLuna Reddit page – including Australia’s LifeLine, and similar organisations from the United States, Britain, Spain, China, Sweden, and 90 other countries.

Local cryptocurrency exchange BitPrime had also been caught out by the extreme market volatility, which forced it to suspend trading temporarily.

In the past five years, Boni had seen the price of Bitcoin swing between a high of US$69,000 and the current low, but he was not panicking. He and other people saw their Bitcoin investments as a hope of one day being able to buy a house.

“At current prices, I have given up on buying a house because in my opinion it’s just too expensive, and the risk of buying a $1m house, which interest rates going up, it’s just too risky.

“Bitcoin went up to US$69,000, let’s say it goes to US$150,000, let’s say it goes to US$200,000, so maybe one day it can become a down payment for a house.

“This is a sentiment a lot of people have below [the age of] 35, a lot of people just gave up and some of these friends also invest in crypto.”

He had decided not to invest in Terra, with his portfolio split between Bitcoin and a cryptocurrency called Polkadot.

The loss he had on paper was not too bad compared to the decline in some technology stocks, he said, which were quite closely correlated to cryptocurrencies.

The cryptocurrency market was similar to the early dot-com era boom, with many small startups emerging, and a lot of people in general still saw crypto as a scam.

Bitcoin’s reputation was better than that of cryptocurrencies in general, which were seen as a “wild West”, not helped by the most recent collapse of the Terra Luna project, he said.

“Bitcoin is one thing, I think it is pretty safe for people to invest because there is no single company behind it, no single country behind it, it’s been around for 14 years now, but crypto in general you need to be really on top of it, all the time, you really need to know what you’re doing, otherwise it’s really risky.”

Boni said a lot of people investing in cryptocurrencies did not have the necessary financial understanding.

“It’s very, very easy for you to lose a lot of money if you don’t know what you’re doing, and of course people don’t go to something that’s safe and consolidated like Bitcoin because the amount of money you can make is not that much.”

BitPrime suspends trading

Christchurch-based exchange BitPrime, launched in 2017, had temporarily suspended trading due to extreme market volatility, which caused it liquidity issues.

The company said it had been hit by a perfect storm, where liquidity had reduced, the market had crashed, and its overheads had increased.

“These have eroded trading capital and liquidity to a point where we felt we couldn’t guarantee fast trading execution and liquidity of customer funds.”

Its overheads had exceeded earnings for some time, but said it was a growth company and had been preparing to raise capital.

“We’re working hard behind the scenes to recapitalise the business, restore reliable operations and facilitate the company’s future growth.”