Rapper KSI Loses £7 Million on Bitcoin

Published Date   10th Aug. 2020, 18:38 pm  Update Date: August 13th, 2021  10:06 am superbhub
Rapper KSI Loses £7 Million on Bitcoin

For every tale you hear of a Bitcoin billionaire making a killing with crypto, there are five stories of enterprising souls who got their fingers burned by the legendary volatility of Bitcoin, Ethereum and the rest. After all, what goes up must come down, so the difference between fabulous wealth and complete disaster can sometimes be a hair’s breadth. 

It’s no surprise that playing the Bitcoin market is sometimes compared with playing at a high stakes roulette wheel. That’s certainly what rapper, YouTuber and reality star KSI found when he decided to sink £2 million into Bitcoin. Unaware of all the risks involved with bitcoin investing, KSI came to realize that the difference between investing and gambling with bitcoin is rather thin.

Big time winner and loser.

Money attracts money?

KSI already has an estimated fortune of £20 million ($27.5 million). There’s a theory that when you have that sort of starting point, it’s easier to accumulate additional wealth than if you’re starting with nothing. The 28 year old decided to test the hypothesis late last year, when Bitcoin prices were on the rise. 

Initially, the strategy looked like a winner. KSI bought at the right time, when the price of one Bitcoin was $13,000 (approximately £9,500). It meant his £2 million bought him 210 BTC. Six months later, the price of Bitcoin had surged to $60,000 (£43,000) and his holding was worth £9 million. 

A £7 million profit in the space of six months is exactly the sort of story that has made Bitcoin such a tempting proposition over the past decade. But then, KSI did exactly what so many others had done before him – in short, absolutely nothing. Bitcoin’s price rise had been a dramatic one, but the fall was every bit as swift and decisive. Indeed, the price dropped by almost 50 percent in the space of six weeks. That price chart looks like a rollercoaster ride, and KSI was firmly strapped into the front seat, frozen in place for the descent.

KSI has been philosophical about the experience – indeed, he almost seems to have enjoyed the ride. Speaking to fellow reality TV star Jamie Laing on the Private Parts Podcast, he acknowledged that it was a mistake not to sell, but said: “It’s been a full journey. I had to experience it.” 

KSI was able to take some comfort from the fact that the crash only wiped out his £7 million profit. That might sound like an unusual application of the word “only,” but the point is that the price of Bitcoin now seems to have levelled out around the $30,000 (£21,500) mark. It means that despite the dramatic fall, his Bitcoin holding is still worth more than the £2 million that he paid for it. As the man himself said, “there’s no point crying over spilt milk.”

The chart tells a thousand stories

Why is Bitcoin so volatile?

You don’t even have to wait and watch for a period of weeks, like KSI, to see the volatility of Bitcoin and other digital cryptocurrencies in action. Most of the drama happened on a single day in May, when data from Coin Metrics shows Bitcoin plummeted 30% to about $30,000. Not to be outdone, Ether also recorded a substantial drop in excess of 40% in the space of a little under 24 hours. At one point, its value dipped below $2,000, before both currencies rallied somewhat in the closing hours of the day.

For crypto traders, that represents just another day at the office. Huge increases and equally dramatic falls have characterized crypto from the word go. But have you ever paused to wonder why?

There’s no simple, elegant answer to that, and as with stocks or Forex, crypto prices are influenced by a whole lot of different factors. In May, much was made of the crackdown in China regarding crypto transactions and the ongoing shenanigans with Elon Musk and Tesla. 

But while these stories sold newspapers, there was more going on in the background. Volatility is an inevitable consequence of Bitcoin’s scarcity and the lack of central bank control that you see with fiat currencies. Also, let’s not forget that in the grand scheme of things, crypto still represents nascent technology. 

Scarcity is a fundamental part of what makes Bitcoin valuable. Right now, there are about 18.8 million Bitcoins in circulation. There’s only a finite amount that can be mined, and that total, 21 million, is edging ever closer. Each new Bitcoin takes more resources to mine and delivers less return. It’s really not so different to working a real mine to exhaustion, and it creates what is called a perfectly inelastic supply.

The lack of a central bank means there’s nobody to intervene when the market shows signs of doing something unusual. No government support to prop up a sudden drop or to artificially damp down a spike. The market is blown along on the economic winds, and there’s no telling what it might or might not do. 

And finally, we must not lose sight of the fact that 13 years is still a short period of time for a whole new type of asset to have existed. We are accustomed to rapid change in today’s world, but tradeable assets need significant data and history. Bitcoin and other cryptocurrencies are still in the price discovery phase, which is the most volatile in the life cycle of any asset. Finding its true value is a path littered with seismic swings, and there will be plenty more in the weeks, months and years ahead. 

Don’t Miss To Follow SuperbHub For More Updates On Celebrity NewsEntertainment, and Biography.


Leave a Reply

Your email address will not be published. Required fields are marked *

Privacy Preference Center




wordpress_55744e494f42348a63852c4bb0d2d393, wordpress_55744e494f42348a63852c4bb0d2d393, wordpress_logged_in_55744e494f42348a63852c4bb0d2d393, wordpress_test_cookie, wp-settings-1, wp-settings-time-1