Over ten years have gone by since Nakamoto conceptualized the peer-to-peer currency, and investors are doing far more than buying pizza with it. In 2017, it was reported that of the 21 million bitcoins in existence, approximately 17 million had already been mined, indicating that given its limited supply, it had boundless monetary value. Bitcoin’s initial coin offering (ICO) was valued at less than $1000 per coin, and in a few short months, it was trading at almost $20,000 per coin, according to CoinDesk. Since then cryptos haven’t been feeling too hot.
Over the course of the last several months, the price of Bitcoin (BTC) has managed to consistently hover around $6000 per coin. Given that in 2017, coins were worth nearly $20,000, the value has been less than ideal, but nevertheless, the low volatility has kept crypto investors relatively calm. As of Friday, Bitcoin (BTC) is currently valued at $3,969.91 per coin, leading investors and analysts in the crypto market to question if cryptocurrencies have finally reached the bottom. Altcoins such as Ether (ETH), Litecoin (LTC) and XRP (XRP) each slid 2-5% in early trading on Friday.
“Many market participants have decided to take an optimistic approach and BTC’s decline to $3500 was an important support point for the cryptocurrency. Within this context, it should be noted that speculators may soon begin to profit from this trend, which may trigger a new wave of sales.”
–Analysts from FX PRO, UK-based research firm
Because of cryptocurrency’s innate volatility, investors can’t seem to figure out how to best move forward with their investments in the space. To be fair, I empathize with the struggle facing crypto fans given the media craze that has surrounded the market since its $20,000 per coin valuation. The fact of the matter is that, as Ric Edelman, founder and executive chairman of Edelman Financial Services, points out, “you need to invest in crypto with two attitudes: that you’re going to hold it for years, even decades and that volatility is an inherent element of the asset. I would add that individuals looking into Bitcoin and altcoins should be fully aware of what they’re actually buying into, despite all the media flair.
In recent news, the Security and Exchange Commission (SEC) fined two celebrities, professional boxer Floyd Mayweather and music producer DJ Khaled, for failing to disclose payments they received for promoting initial coin offerings (ICO), according to Forbes. The indictment of Mayweather and Khaled specifically relates to their involvement with Centra, a cryptocurrency platform that raised almost $35 million from angel investments last year. According to TechCrunch, neither celebrity admitted nor denied the SEC findings, and simply elected to pay disgorgement, penalties, and interest. Mayweather collectively paid the SEC roughly $620,000 in fines and Khaled agreed to pay about $153,000, give or take a few shekels.
At the time, Centra assured investors that all funds gathered in the company’s coin offering would be allocated to building out Centra’s platform, including integration of a debit card backed by Visa and MasterCard “that would enable users to convert thinly-traded cryptocurrencies into U.S. dollars.” However, as is the case with many things in life that turn out too good to be true, Centra was no different. Several sources reported that Centra never had any sort of relationship with Visa and MasterCard, and the ICO was a total fallacy. Back in April, the SEC shutdown Centra’s platform and filed fraud charges against the company’s founders; Sam Sharma and Robert Farkas.
“We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses. As the complaint alleges, these and other claims were simply false.”
–Stephanie Avakian, Co-Director, SEC Division of Enforcement
