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Redditor bet life savings on Bitcoin and lost it all

Redditor bet life savings on Bitcoin and lost it all
A cautionary tale from Reddit’s Bitcoin subreddit (Getty)

An unfortunate Reddit user has been taken in by the Bitcoin boom and lost his entire life savings.

Going all-in on the digital cryptocurrency, user Prudent_Plum_7644 posted a heart-wrenching account of his experience and a warning to others.

‘I completely messed up guys, my life savings are gone for good, I have learned a devastating hard lesson,’ he wrote in the post on the Bitcoin subreddit.

He goes on to detail how he and his wife amassed 1.7 BTC which, at current rates, is around £58,400. He said it took the two of them ten years to amass the money, saving as much as possible and taking on odd jobs wherever possible.

Then he started to trade.

‘I started future trades and managed to turn the 1.7 BTCs into 2.1 BTCs, the classic beginner luck,’ he wrote.

Unfortunately, he put all the funds into a type of trade called leverage futures – betting that Bitcoin’s value would continue to rise.

When it fell, he says he lost it all.

He wrote, ‘Of course it didn’t play out, BTC went from touching 50k $ down to 47k $ and our whole life savings have been wiped out.

‘I still haven’t say anything to my wife, she doesn’t know that and this is killing me from the inside. I just don’t know what to say to her, I’m simply devastated. I barely can watch myself in the mirror.’

Ending with a plea to others not to fall into the same trap, the Redditor posted: ‘Please follow my advice, don’t trade guys, don’t fall into these marketing traps like I did.’

To prove his story, he posted screenshots of his future trade being slowly liquidated as Bitcoin fell rather than rose in value.

Screenshots showing the funds slowly draining away (Prudent_Plum_7644/Reddit)
Screenshots showing the funds slowly draining away (Prudent_Plum_7644/Reddit)

Other Redditors took pity, but reinforced the notion that putting the entirety of one’s funds into a single trade is not a smart move.

‘That sh** is legit dangerous and the average investor shouldn’t touch it with a 10m pole,’ commented one.

Another added: ‘Sorry to hear that man. Be honest with your wife. Tell her your heart and beg for forgiveness. Then come up with a plan and rebuild your stack.

‘And don’t ever attempt to surprise your spouse by making a move with your entire combined life savings again. She has a right to know and not be surprised, either good or bad.’

Galina Stavskaya, Head of Investments at Claro Money, explained: ‘Future trade is when you agree to buy or sell an investment product at a certain date in the future at a certain price, with both future transaction date and price are being determined today.

‘It’s like going to a store today and saying “I will buy this car in 2 months at £5000” and signing a contract to do so.

‘If the price of the car in 2 months is above 5,000 – you made money, if the price is less than 5,000 – you lost. The trade involves no exchange of money today – only signing of the contract to perform this pre-planned transaction in the future.’

The rise of ‘finfluencers’

An employee views a FTSE share index board in the atrium of the London Stock Exchange Group Plc's offices in London, U.K., on Wednesday, May 29, 2019. While the FTSE 100 Index has climbed about 15 percent since June 2016 in local currency, it's down in both euro and dollar terms. Photographer: Luke MacGregor/Bloomberg via Getty Images
An employee views a FTSE share index board in the atrium of the London Stock Exchange offices (Getty)

Anyone looking to try investment or trading needs to be wary of where they get their information from.

The rise of online communities can be a double-edged sword as ‘finfluencers’ attempt to sway people towards unrealistic outcomes.

In the worst case, like the situation above, investors can lose a lot of money.

‘Investment advice is activity that is legally regulated by the Financial Conduct Authority of the UK. There are hundreds of people and multiple departments in FCA that study current products and create rules in order to protect ordinary people from making wrong financial decisions,’ Galina told Metro.co.uk.

‘Regulated firms and individuals must not only go through a strict due diligence process in order to get regulated by FCA, but also follow all the rules and regulations that evolve. If you take advice from places like Reddit and YouTube without checking whether those who provide the advice/recommendation are authorised to do so, you are risking making wrong financial decisions and losing some or all of your money.

‘The rise of ‘finfluencers’ means that the topic of money and investments is more accessible and mainstream, which is positive. However, self-proclaimed experts on the likes of Reddit and YouTube can offer advice which is not regulated or supported by any form of expertise or qualification.

‘Often, those sharing advice on these channels are promoting risky trading on the likes of Bitcoin, which is not appropriate for all users. What works for some, doesn’t for others and it’s important that people seek coaching and guidance from credible experts that have knowledge beyond their own experiences.

‘What’s more, it’s easy to read a single post or watch a quick video from someone you can relate to, and that is easy to understand, and make an investment decision based on this.

‘However, it’s important to look at the wider picture and consider the context of the advice, how this actually relates to your financial position, and what regulated bodies as well as financial advisors or coaches think of this specific piece of advice.’


MORE : PayPal now lets UK users buy and sell cryptocurrency like Bitcoin and Ethereum


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