The time I doubled my money in a month investing in bitcoin

There’s a phenomena called the “Day of the Week Effect” in markets: it helps economists explain particular movements in a market, any peculiarities, matching them to the specific reasons why those peculiarities have taken place (there are others: the Turn of the Month Effect, the Month of the Year Effect, the January Effect, the Holiday Effect, the Halloween Effect etc.).

A simple example might be the following: why was there a huge surge in retail footfall in the week that included the hottest day of the year? We all went out and had picnics in the park. Why did copies of Piers Morgan’s books sell highest during the week that included the coldest day of the year? In case the leccy ran out on the meter or the firewood got damp.

Recently a couple of academics realised all different types of markets had been studied in relation to the Day of the Week Effect but not the emergent cryptocurrency market. So they went away and did it themselves.

In their paper, Guglielmo Maria Caporale at Brunel University, London, and Alex Plastun at Sumy State University find that most cryptocurrencies don’t show signs of the Day of the Week Effect; in other words there’s no particular days in the week when new currencies like LiteCoin, Ripple, and Dash return higher profits.

The exception is Bitcoin: it’s early days, but their study provides evidence for “abnormal positive returns on Mondays”. Bitcoin has the “Monday Effect”.

Fascinating. So I wanted to experiment myself.

Firstly I wanted to invest a little bit of money on Bitcoin and to see if I recorded personal financial evidence for “abnormal positive returns on Mondays”.

Spoiler: whether there are “abnormal positive returns on Mondays” remains inconclusive. What I found out instead is what everyone else now knows: that the value of Bitcoin went bananas over that period. And that period happened to really take off on the day I bought my Bitcoin.

I bought Bitcoin 28 days ago. I logged onto the digital asset broker Coinbase and passed through the necessary security hurdles to obtain a bitcoin wallet, which I now access through the blockchain, a distributed ledger which securely records all bitcoins transactions.

In those 28 days Bitcoin is generating loads of attention. Before, all the chat was about countries trying to ban cryptocurrencies, drug dealers allegedly stashing crumpled up £20s in Bitcoin machines. Now: “Is it a bubble”? “What are serious investors saying?” “Could it be worth $100,000 by the end of 2018?”

Positive returns on a Monday? Forget that. Every day brought abnormal positive returns.

It took exactly 3,060 days for one Bitcoin (BTC) to go from being worth 0 to $2,000, in May 2017. You could hear the shock in the headline for TechCrunch: “Bitcoin just surged past $2,000 for the first time”.

It took 95 days for the value of BTC to go from $2,000 to $4,000. Then:

— $4.000- $6,000: 69 days

— $6,000- $8,000: 27 days

— $8,000- $10,000: 11 days

— $10,000- $12,000: 7 days

— $12,000- $14,000: 1 day

— $14,000- $16,000: less than 1 day

The Twitter user Jack Sparrow — the collator of the above information — put this out yesterday:

So what did this mean for me exactly?

Well, on the evening of Saturday 11th of November I tried to make a bank transfer from my current account of £x (I’ll return to the amount in a moment) to the Bitcoin wallet. That was declined. I checked, I did have enough in my current account. So I tried again. Declined.

The next day I get a call from the fraud department of my bank. “Hello Mr Packman”, the lady on the other end of the phone began, “we are from the fraud department of [a bank] and we just wanted to ask a couple of questions on your last few transactions”. Sure.

Direct debits here, subscriptions there, this pub, that pub, one too many pubs. Then, did you attempt to buy bitcoin? Are you now or have you ever been a member of the cryptocurrency community? Are you looking for a safe job in the politburo decentralized committee?

Once I agreed — I was in fact in control of my account when attempts were made to buy Bitcoin — I was told the transaction could now be made. I returned to my blockchain app, entered my 4-digit pin, pressed Request, requested a payment to My Bitcoin Wallet (not Ethereum, just yet), then Bob’s Your Teapot I had Bitcoin. I’m one of those people now. Where’s that Old Street coffee shop again?

Now for the big reveal, how much did I invest: £15. Sure, I’m an experimental small investor, just dipping my toe in the water before I’m playing with the big guns. My investment, FWIW, was a mere speck on what I’d spent in the pub the previous night.

So after 35p was taken off as the “trading fee”, I had £14.65 (which given that one BTC was worth about $7,900, meant I had about 0.00288177 BTC). One week later I had £18.62. Mum, Dad, I’m making money on cryptocurrencies. The next day one BTC hit $8,000 and the tech/financial press became very excited/nervous/expert. In fact as Jamie Bartlett correctly points out:

The next week, Saturday 25th November, I had £20.96 (and the price of one BTC was £6,729.48). I was excited. Definitely nervous. Probably felt like a bit of an expert, too.

Then, Korea’s second largest bank tested the Bitcoin vault and wallet for client services and one BTC hit $9,500. People were thinking, ah maybe that’s what makes it surge: a combination of trust (big firms using it for customers) and a greater number of users.

On the same day it edges closer to $10,000 and the crowd at this point are going absolutely nuts. Just listen to Bloomberg Technology shout their headline: “BITCOIN GUNS FOR $10,000 AS CRYPTOCURRENCY MANIA DEFIES SKEPTICS”.

Shit! A week later, Bitcoin Just Crashed Over $1,000! But don’t worry, it’s ambling along just fine now. Just a temporary fall. It goes up it goes down but mainly it goes up. It’s like a space rocket, flying up, higher and higher, steady, higher, down a bit to avoid spacedust, back up, really quite high up because another Asian bank has done a little experiment, back down because some bloke who bought £100 in 2010 who is now a multimillionaire has cashed in to buy a planet.

And then, on the evening of December 6, 2017, I had doubled my money on Bitcoin. As it surged $12,000 I had landed on the £30 mark! 28 days! It took the equivalent of the length of three in every four Februaries to double my value, financially, in this world.

I’m smug now. You want to double your money as an investor in the vanilla way? One expert, Paula Pant, has shown that S&P 500 companies returned a nine percent average for stockholders between 1990 and 2010. And with the help of the Rule of 72 (a shortcut that helps you figure out how long it will take your investments to double) I could double my money in eight years. Nah. I did it in 28 days.

Paula Pant also tells me to look at bonds: if my bonds return 5 percent on average every year, then according to the Rule of 72 I’ll be able to double my money every 14.4 years. Nah. 28 days.

Or, says Pant, just spend less. Yeah, thanks for the life hack, Pant! 28 days.

During those 28 days I also downloaded an app that allows me to invest money on stocks and shares through rounding up my transactions to the nearest pound. A very good idea, I love it. I’ve got £60 in that one. How much have I made doing that? Minus 24p to date. I’ve lost 24p. 24p versus 28 days? No brainer.

I’m not being serious about any of this, and my goodness be not confused: this is not investment advice. Truth be told I don’t know what Bitcoin is doing. Nobody does.

But what I do know is I doubled my money in 28 days. £15 to £30. And if you can rest at night knowing that the bitcoin network uses up as much yearly electricity as a medium-sized country, then who am I to tell you to stop. Though you might want to think about the environment thing.