Family who sold everything to buy Bitcoin loses more than $1 million in market rout
The “Bitcoin family,” who sold everything they owned to invest in the digital token when it traded for just $900 in 2016, have lost more than $1 million on their cryptocurrency investments amid market volatility in recent months.
However, Dutch national Didi Taihuttu, who is married and has three daughters, remains unperturbed.
“The volatility of the cryptocurrency market does not disturb us at all,” says Taihuttu.
“There are two wonderful moments in Bitcoin. When we reach the top to make money and when we reach the bottom so we can buy again. We are in it for the long term, but at the same time multiply BTC with trading.”
On Wednesday, Bitcoin traded at $22,921.58 as of 8.22 UAE time.
It’s been a rough ride for the cryptocurrency market as prices plummet with some of the most popular companies in the industry filing for bankruptcy.
The “crypto winter” came amid 40-year high inflation in the US, rising interest rates in many parts of the world and fears of a recession, with Bitcoin falling below $20,000 in June – some way from its November high of $67,734. .
About $2 trillion has been wiped from the market cap of cryptocurrencies since the end of last year, according to data compiled by CoinGecko.
“Even before the current downturn in the crypto market, volatility has always been an inherent feature of the crypto space,” said Devesh Mamtani, market strategist at Dubai-based Century Financial.
“The current spike in Bitcoin volatility is primarily due to the drying up of global liquidity.”
Global central banks led by the US Federal Reserve and the European Central Bank have started the process towards achieving interest rate normalisation. The Fed has also begun reducing the size of its balance sheet under quantitative easing, according to Mamtani.
“Another factor causing Bitcoin volatility is the panic selling. Bitcoin prices tend to react worst when they are near their major support drops,” he says.
As for an appropriate level to buy Bitcoin, the asset’s overall bearish cycle is intact, Mamtani says. This has caused a sell-on-rise scenario when prices have risen.
Conservative investors may look for further drops below the $20,000 to $18,000 zone for good entry levels, he says.
“However, it is important to note that cryptocurrencies tend to be highly volatile. Therefore, it can be very difficult to target an entry at a specific level, especially during periods of high volatility and tremendous market turmoil,” warns Mamtani.
Mr Taihuttu continues to buy Bitcoin during the dive. He had previously exited his Bitcoin positions and then bought back in.
This is the third market cycle the Taihuttu family has experienced and “now you understand that BTC will always create a new path”.
“We sold Bitcoin when it was around $55,000 after it dropped from $70,000. We exchanged part of the Bitcoin capital to USDT [stablecoin Tether] to buy back cheaper, he says.
“We exchanged 15 percent of our Bitcoin holdings for stablecoins, but we gained more than 3,000 percent since 2016 when we sold everything to invest in Bitcoin.”
Taihuttu believes Bitcoin prices have bottomed out.
Buying at $20,000 or $15,000 doesn’t matter if you think Bitcoin will go above $100,000, he says.
“Investors, investment funds, companies, countries and banks are now taking BTC seriously,” he adds.
Bitcoin investors sitting on profits should look to partially book their holdings, suggests Mamtani.
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Investors with an average purchase price in the $14,000-$18,000 zone (who bought during the bull cycle between October 2020 and November 2020) can look to start booking profits at these levels, he says.
Technically, for Bitcoin prices, the most critical level to watch out for would be $17,500-$18,000. A break below these levels could mean further losses for the asset class, according to Mamtani.
Meanwhile, the Dutch family of five have been traveling the world for the past six years. They currently operate a Bitcoin bar on one of the most popular beaches in Lagos, Portugal.
“We are still traveling but at the moment we are in Portugal for the next six months as I opened the BamBamBeach bar in Lagos where people can pay with BTC using the Lightning network,” says Taihuttu.
Lightning is a payment platform built on top of Bitcoin that enables instant transactions with low fees. Mr Taihuttu plans to convert all vendors on the beach into lightning-friendly retailers.
“I converted another beach bar, a restaurant, a sailing school and an adventure company to accept Bitcoin as well, so slowly we will grow to become the Bitcoin beach in Europe,” he says.
“The future plan is to decentralize BamBamBeach by tokenizing it and using a decentralized autonomous organization, among other measures.”
Taihuttu believes the cryptocurrency industry is the “biggest peaceful revolution” changing the future of money.
“It is the first time in our lives that we are experiencing a real decentralized way of working for money,” he says.
Although he dabbles in other coins and stablecoins, Mr Taihuttu’s goal is to acquire more Bitcoin.
“I don’t need to work anymore since we have enough Bitcoin, but because I like it, I shop, talk, write, make YouTube videos and much more.”
Although Bitcoin and cryptocurrency investments have matured in the past two years with more participation from institutional investors and large Wall Street banks, the need for solid and stable regulation from developed market authorities, according to Mamtani.
If this is not successful, the sector will still be seen as speculative and more barriers to establishment will exist, he says.
The Taihuttu family stores their portfolio of cryptocurrencies in secret vaults around the world, with 70 percent of their holdings in cold storage and 30 percent in hot wallets, which they access for daily expenses.
Cryptocurrencies – in pictures
Hot wallets are connected to the internet and give cryptocurrency owners easy access to their digital coins. The cold wallet storage method is more secure as it is completely removed from the internet ecosystem.
“We store a larger share in cold wallets because we don’t need BTC since we live a normal minimalist lifestyle where ownership of luxury products is not necessary,” says Taihuttu.
“We believe that each BTC will go up to 1 million dollars and then will be usable as peer-to-peer cash, so why would we exchange this real money for the fake one that is printed unlimited?”
Long-term Bitcoin investors could probably store their assets in a cold wallet, suggests Mr Mamtani.
“Taking the stakes offline can greatly reduce online hacking as well as other platform-related risks,” he advises.
“Investors should only look to buy the hardware from a reputable vendor. The investor should also be careful about the private key storage and not disclose this to anyone.”
We gained more than 3000 percent since 2016 when we sold everything to invest in Bitcoin
Didi Taihuttu
On the other hand, investors who want to trade and invest in Bitcoin for a shorter duration, of less than a year, can look to invest or trade through platforms such as futures exchange brokers and CFD (contract for difference) providers, says Mamtani .
The division to store such assets will depend on the investors’ requirements for liquidity.
“For example, an investor who needs immediate liquidity and is fearful of further market declines may look to keep most of their holdings in a warm wallet,” says Mamtani.
“An investor who is not concerned about market volatility and can sustain without immediate cash requirements may look to simply put some percentage of their Bitcoin holdings into a hot wallet for short-term opportunities and plays.”
Updated: 11 August 2022 at 05.00
