Sunday, January 7, 2018

Mortgaging homes and borrowing money: The Bitcoin mania is looking an awful lot like the Roaring 20's

One of the more interesting scenarios that led to the 1929 stock market crash was the fact that nearly everyone, from the shoeshine boy to Wall Street millionaires, were leveraging their assets on margin to buy stocks.  And as the now infamous October market crash of that year helped lay waste to the wealth of thousands, so too are we unfortunately beginning to see this occur in the cryptocurrency markets.

Besides the individual stories of people selling or mortgaging everything to buy Bitcoin and other cryptocurrencies, a new study out on Jan. 7 shows that upwards of 20% of Bitcoin investors borrowed money to play in this speculative arena.

According to LendEDU, a personal loan research firm, more than 18 percent of Bitcoin investors have used borrowed money to trade the cryptocurrency. In a global survey of 672 active Bitcoin investors, researchers asked traders the method they used to fund their cryptocurrency trading accounts. The majority of investors used banking systems such as credit cards and ACH transfers to fund their accounts. 
But 22 percent of traders revealed that they have not paid off their credit and debit cards after purchasing Bitcoin, effectively investing in the cryptocurrency with borrowed money. The report read
“The wisest and most frugal way to fund a virtual currency exchange account would be through an ACH transfer, which is completely free of charge. Only 18.60 percent of our 672 Bitcoin-invested respondents were paying for the cryptocurrency in this fashion.However, this was not even the most pressing concern coming from the LendEDU poll. That recognition belongs to this data-point: 22.13 percent of Bitcoin investors did not pay off their credit card balance after purchasing Bitcoin.” - Cointelegraph

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