People are getting rich off cryptocurrency, especially those who took a chance on it early.
One high school dropout who invested in bitcoin when it was just $12 per token became a millionaire at age 18. The Winklevoss twins, who owned more than $11 million worth of cryptocurrency in 2013, became the world’s first bitcoin billionaires in 2017.
San Francisco-based millennial Grant Hummer has also made a small fortune off cryptocurrency, and he’s angling to turn that into an even larger one. As Nellie Bowles of the New York Times reports, Hummer and his co-founder James Fickel “committed $40 million of their own crypto-made money to their new $100 million hedge fund, Chromatic Capital,” a cryptocurrency asset management firm based in the Bay Area.
The value of digital currency has been on a roller coaster ride over the past year. In 2017, bitcoin went from $830 to $19,300. On Wednesday, it fell below $10,000 for the first time since November 2017 and more than $30 billion was shaved off of its market value in 24 hours.
Ethereum, the world’s second-largest cryptocurrency, started the year at less than $10 and finished 2017 at $715. It hit an all-time high of $1,417.38 in January 2018 but sunk beneath $1,000 on Tuesday.
For investors like Hummer, the dramatic price swings can result in losses of hundreds of thousands, or millions, of dollars in a single day. “My neurons are fried from all the volatility,” said Hummer, who still lives in a modest dorm room in what building residents call the “Crypto Crackhouse.” He himself tries to tune out the noise: “I don’t even care at this point. I’m numb to it. I’ll lose a million dollars in a day and I’m like, OK.”
Cryptocurrencies are extremely volatile assets. That’s why top investors like Mark Cuban say you should only invest money you’re prepared to lose.
It’s all right to invest up to 10 percent of your savings in high risk investments like bitcoin and ethereum, Cuban told Vanity Fair — you’ve just “got to pretend you’ve already lost your money,” he said, adding that it’s like throwing “the Hail Mary.”
Tony Robbins has his own analogy for investing in bitcoin: It’s “like going to Vegas,” he told CNBC’s “Fast Money.”
Cuban and Robbins advise only betting on what you can afford to lose. If you win, great. If you don’t, at least you haven’t gone bust.
Joe Buttram, 27, is another bitcoin multi-millionaire who quit his job and is starting a hedge fund. As he tells the Times, the risk with crypto is “it’s unforgiving. You make one mistake and it’s all gone.”
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