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Here Come the Armchair Speculators… In Their Droves!

There is nothing like a nasty crash and eye-watering losses to make you run a mile from a dubious trading opportunity or fragile asset class.

Surely the $700 billion collapse in the value of a collection of 5 cryptocurrencies yesterday was enough to cause even the most ardent advocate of digital assets to reach for the ‘power off’ key on their computers and call it a day.

Remarkably, however, the absolute opposite has happened.

The global interest in digital assets, despite their unbacked and highly volatile nature, which is controlled not by market analytics, the commercial results of listed companies or geopolitical announcements, but by communities.

Previously non-influential outbursts on social media by people who are not at all involved in the financial markets sector have been able to create booms and collapses.

What’s more unbelievable is that the world’s regulators, government officials and other such people with positions of power made tremendous reactionary rulings, laws and market practice overhauls after the global financial crisis in 2008 and the credit crunch caused by unsecured sub-prime borrowing with scant underwriting, and the financial markets sector made a huge fuss about the Swiss National Bank’s removal of the EURCHF peg in 2015 which caused volatility so tremendous that brokerages and banks suffered vast negative balance related losses.

Yet nobody said a word when $700 billion disappeared from the value of the 5 cryptocurrencies concerned yesterday.

That is remarkable in itself, however the most unbelievable dynamic has now surfaced in that quite the opposite to seasoned cryptocurrency traders and investors turning their back, the demise in price which in one day has fallen more than bank stock during the 2008 meltdown and the Swiss National Bank effect combined, has caused new interest in buying into cryptocurrency.

The new interest is not among gamblers or mavericks either. It is among sensible, educated and astute middle class people from Western nations, who view the collapse as an opportunity to buy in and wait until it goes up again.

This is a very clear signal that the ideology behind cryptocurrency in that it is a peer-to-peer decentralized method of creating a huge market which can be influenced by members of the general public and therefore shows the huge difference between cryptocurrency and traditional physical commodities or sovereign currency trading.

Many of those with a new interest are in their 40s, and have good careers, often in the high technology or computer science sector and are financially conservative.

A far cry from the rebellious advocates of cryptocurrency ten years ago, who cited the banks as villains and the hipster generation as the people’s army which would adopt digital currency and bring down the establishment.

Far from this has happened, and indeed cryptocurrency’s new advocates have created their own new establishment. An establishment which sees itself as an economy in its own right, and one which is prepared to see the massive fall by hundreds of billions of dollars as an opportunity rather than an event which riles the regulators and governments of the world, which, let’s face it, have not been the citizens’ friend over the past year.

The days of conservative investing are still here, they’re just different these days.