Personal Finance

Money at 30: Keeping Crypto at Arm’s Length

What was already being called the “Crypto Winter” has certainly grown colder in just the past couple of weeks. With the implosion of FTX, things are changing quickly. And, while I didn’t have an FTX account, the news has actually impacted me as BlockFi has also paused withdrawals due to their ties to the platform. Meanwhile, as you can imagine, prices for several cryptocurrency assets have been sagging even lower as of late. In all this, I find myself being thankful that I’ve mostly kept crypto at arm’s length and tempered my investments in that realm.

My cryptocurrency exposure

As I alluded to, I have been known to at least dabble in the world of cryptocurrencies. My first purchases came when Robinhood initially introduced crypto trading. Before that, I never bothered to look up how to actually go about buying (or selling) Bitcoin, Ethereum, etc. Subsequently, I’ll also ended up purchasing a few dollars worth of various coins when other platforms such as Cash App, Public, and others added support for crypto trading. I’ve also been a fan of the app Fold, which I used to earn Bitcoin back on gift card purchases.

Speaking of Fold, it was around the time that I was looking to cash out my earned Sats on that app that I decided to open an account with BlockFi. At the time, the account was known as their BlockFi Interest Account and, as the name implies, allowed me to earn yields on the relatively small amount of Bitcoin that I had. Sadly, that amount is now locked up as the company has halted all withdrawals.

So what’s my loss in all of this? Well, there’s currently about $50 in my BlockFi account — although that figure is diminished by the fact that Bitcoin’s trading price has been low lately. That lower level also means that the other $50 or so I have in crypto is also down, but at least I can still hold onto those assets whereas the fate of my BlockFi funds no longer seems to be in my hands.

The temptation

At this point, I’m very happy to have only had $50 in my BlockFi account. However, had I listened to temptation, that might not have been the case. Back when even the most generous of online banks were offering less than 1% APY, BlockFi’s accounts could earn 5% APY or more. Coupled with the fact that Bitcoin had been known for its wild rises, there was definitely at least some part of me that wondered whether a larger investment might be a good idea. Luckily, I realized that there was a lot of risk in this option, which is why I kept things modest.

I say this not to brag about how smart I am or dunk on those who did go bigger. On the contrary, I totally sympathize and could easily see myself in their position. Heck, just looking at the life of a guy I hung out with at a DC bar back in 2019 who has since become a millionaire thanks in part to crypto trading (and proselytizing) makes me feel as though perhaps my life could be different if I were a bit braver. Of course, those types of thoughts are exactly what can get you into trouble.

Looking ahead

So what’s my plan for crypto going forward? Well, in the case of my BlockFi account, I don’t really have many options other than to wait around and see. Should I eventually be able to withdraw, I’ll likely move my holdings to Cash App or Robinhood. On that note, I’ll continue to hold the small amount of crypto I have but don’t really anticipate buying much more for the time being. Would it be better for me to just cut my losses and sell? Maybe — but there’s little harm HODLing my small stash for now.

Unlike those who seem to take great glee in the current crypto troubles, I’m actually a bit bummed about the whole thing. That’s not just because I do have a few dollars at stake but more so because I do think there are interesting applications for cryptocurrencies that have yet to be fully realized — mostly since many of us see them purely as an investment (or perhaps gambling, at this point) play. I’d also note that there are plenty of innocent consumers, employees, and others negatively impacted by these issues. With all of that said, the past several weeks have been a wake-up call for many and a reminder of the risks that come with these types of emerging markets. As for me, I’m just thankful that I didn’t let my curiosity and covet get the better of me lest I find myself with far more lost in this whole debacle.

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