Crypto’s collapse makes me happy even though I’ve lost money

Bitcoin and other cryptocurrencies have lost three-quarters of their value in a year, amid some forecasts they could hit zero, but at least one owner doesn’t mind.

Earlier this year I spent time studying cartoon-like digital drawings of chimpanzees wearing weird clothes, and silently kicking myself for not buying one year earlier.

These were the Bored Ape Yacht Club NFTs, or non-fungible tokens – digital assets that are bought with cryptocurrencies. They had taken the world by storm – selling for up to $5m each despite being created from thin air with a drawing quality many artists could easily reproduce.

NFTs were the next step on in the world’s cryptocurrency craze that had created bitcoin billionaires, and these NFT digital artworks were in hot demand as people paid crazy prices for online collectibles and art.

That was before the dark times. Before the crypto winter, and November’s ugly collapse of one of the world’s biggest cryptocurrency exchanges, FTX.

Bored Ape NFTs that were launched in April, 2021 at about $250 were fetching a minimum $540,000 a year later – buoyed by celebrity owners including Eminem, Justin Timberlake, Paris Hilton and Jimmy Fallon. Their floor price today has dropped to about $96,000, a figure that still freaks me out.

Bored Ape Yacht Club NFT owners were all smiles before they fell hard. Picture: Supplied

I never bought NFTs, but in 2021 I spent a few thousand bucks buying a collection of cryptocurrencies including bitcoin and Ethereum, the key trading currency for NFTs. These purchases were mainly an experiment in fear and greed, mixed in with a little FOMO – fear of missing out – and a desire for knowledge about this insane new era for investing.

It was going to be the future of finance, people were told, and those who didn’t believe were mocked for not understanding that.

But now, after the value of my crypto has dropped by two-thirds in a year, I’m actually feeling satisfied and happy.

It’s restored my faith in the world of finance and investment, by showing that you can’t create an asset from nothing that does nothing, and expect it to forever rise in value because people blindly buy into it.

With property investment you get a house or other building, with shares you get a slice of a company with real assets, with cash you get real cash that can be used to buy and sell things.

Cryptocurrencies are also used to buy and sell things, but if you stashed some away a year ago and expected it to behave like cash, today you’d be very disappointed.

Nobody knows what will happen to crypto and NFTs in the months and years ahead. The FTX implosion is seen as catastrophic for crypto and has sparked speculation that the death of digital currencies is looming. Respected global newspaper The Economist said: “Never before has crypto looked so criminal, wasteful and useless”.

Others say crypto has a history of bouncing back from scandals and collapses, and most tech experts believe that the blockchain technology that underpins crypto has a bright future.

My experiment in fear and greed may still prove profitable.

The previous crypto winter – between 2018 and late 2020 – was followed by an insane boom in prices.

If that eventually happens again, many people will make money. If it doesn’t, I’ll be quietly satisfied to lose money.

Originally published as Crypto’s collapse makes me happy even though I’ve lost money