My Bitcoin Investment Journey- Part Three

Watching a bitcoin investment value drop by half while still maintaining hope

I lost HOW much???.

In my previous installments about my investment into bitcoin, I discussed how I viewed bitcoin as an alternative investment and how it has a place in my investment portfolio for asset allocation purposes.  I then discussed how I wished to make it a longer term investment and part of my retirement portfolio.  However, at the time, it wasn’t easy to find an appropriate bitcoin investment for a retirement account.

What I found was the Bitcoin Investment Trust, which was available only for accredited investors and required me to lock my funds into the investment for at least one year.

I then invested my current year’s SEP contribution of $25,000 into the Bitcoin Investment Trust.  Four months later, I looked at my account and noted that I had lost over half of my investment.

Half of my investment gone!  Poof!

I began to question my faith in bitcoin. I began to question my wisdom in placing $25,000 into an investment that I couldn’t get out of. I also began questioning my sanity in writing about it and letting the world know about my experience.

Since I was stuck in my investment for the next 8 months, I figured it was time to truly see if this was in fact, the oft-heralded “end of bitcoin” and my $25,000.  So I began to explore the current situation related to bitcoin at that time (October, 2014).

Among the activities that were occurring around bitcoin at that time were the reality that more and more companies like eBay and even charities like the United Way were now accepting bitcoin.

Even Sir Richard Branson of Virgin decided that he would accept bitcoin as a payment for his commercial spaceship travel. If it was being accepted like cash, then surely bitcoin was gaining some legitimacy in society. 

I even visited the first bitcoin ATM to open in New York City and exchanged some good old greenbacks into bitcoin.

It was in the back of a UK based goods store in the West Village and you may need some assistance from the owner to get it to work properly, but heck, it would be the first of many, I hypothesized.

Over those four months, the price of bitcoin had collapsed from the high $600 range in June 2014 to the low $300 dollar range (soon to go below even $200 a few weeks later).  There would be no solace in seeing any potential upward momentum in the price of bitcoin.

However, I began to hear something that was like the sound of bluebirds in spring.  It was the term, “blockchain.”

I began hearing how something called the “blockchain” was fast becoming of interest to venture capitalists and financial companies.  Attending a couple of bitcoin conferences, I began to encounter companies such as Ripple Lab, Factom and others who were positioned to utilize the underlying technology of bitcoin, the "blockchain", to change the way financial transactions are being handled worldwide.

The “blockchain” is the underlying infrastructure of bitcoin and its decentralized and efficient method of performing transactions was being seen as a way that financial companies could improve their existing technology and a way that new startups could disrupt existing financial models and make a profitable change to the way money is transacted.

Venture capital began to pour into these “blockchain” startups and even crowdsourcing efforts allowed those with bitcoin to become early investors in many of these companies.  Surely this growth in interest in the “blockchain” would propel bitcoin to a higher price.  I began to have hope in simply retaining my initial investment in the Bitcoin Investment Trust.

My enthusiasm was tempered when at the start of 2015, bitcoin dropped below $200.  Had I become a sucker for believing in blockchain in the same way that I had fallen for bitcoin?