Confessions of an Almost Crypto Millionaire
A cautionary tale in the wake of the new boom
It was the late summer of 2017. I had just graduated summa cum laude with a degree in computer science and was in the middle of an internship at a robotics company. As a rather ambitious fellow, I naturally treated the latter, my first real job, with utmost seriousness. Be it the weekend or a national holiday, not to mention the regular office hours, I was sitting at my desk, training artificial neural networks and reading technical papers as if my life depended on it. I wanted to excel. I needed to prove my worth.
You see, I come from a family of modest means. My father was a construction worker, and so was his father before him. As for my mother, she invested all our funds in her venture, a laundry house, until so little was left that we had to start selling things. In retrospect, it’s perhaps our couch that I held dearest among all the vanished objects. Its absence sure turned out to be a real pain in the ass. Literally.
Despite our dire circumstances, they weren’t bitter. They didn’t blame the world for their misfortune. On the contrary, they were individualists through and through, strongly believing that a person’s fate is his, and only his, to decide. My working-class parents had always lectured me that the world works according to a simple causal principle: the harder one works, the more success one enjoys. I believed them, too, even as they themselves appeared to be an exception to their own rule.
Such gospel in my younger and more vulnerable years instilled into me a sense of awe of the wealthy. I developed an understanding that people of means are somehow more worthy of life. To have acquired wealth means to have worked harder, to have persevered in the face of adversity, to have been relentless. It was in this state of mind that I went through my years in college and through my stint at the internship. Through life, really. I had an intense desire to prove to myself that I, too, am worthy, and the only way I knew how was to put in the hours.
Then, on one fateful day, that belief system of mine was suddenly turned upside down. During our regular daily lunch with co-workers, one of them started boasting about quadrupling his savings over the past few months. No magical insight was needed, no hardships had to be endured, Heck, he didn’t even have to break a sweat. Not a single goddam drop. On a whim, he had simply put his money in bitcoin, and apparent luck did the rest of the work.
The magnitude of the influence his story had on me is hard to understate. Here was I, grinding away in a dark corner of the room, day and night, to leave my mark. Exactly like I had been conditioned to do. There was he, barely showing up for work, making thousands of dollars a day doing next to nothing. There went my romantic notion of the rich. I had been lied to by my parents, money does grow on trees. I just needed to be bold enough to climb up the shaky ladder to reach it.
So I started my ascent. I read the original Bitcoin white paper that same evening. I learned about teams with no product raising millions of dollars from the general public through Initial Coin Offerings. I learned that the price of bitcoin had increased more than fourfold over the past half a year, from about 1,000 USD to more than 4,500 USD. Over the same period, the whole cryptocurrency market rode up from 27 billion to 166 billion USD, a sixfold increase.
By the end of the day, I had already set up two accounts. First, a brand new Twitter account, for exclusively following crypto news and tradesmen. Second, and more importantly, an account at a centralized exchange for trading. I needed to move, and I needed to move fast. Millionaires were being forged right in front of my eyes, and I was dying to be reborn a one. There was just one tiny problem, though. Having recently graduated, I didn’t have any available funds to invest.
Enter the scholarship. I had been accepted to a renowned Machine Learning and Computational Statistics master’s program at University College London. The one-year program was to start in less than a month, a day after the end of my internship. Me actually going there, however, was conditional on whether I was able to conjure up enough funds to pay for its substantial fees. As luck would have it, a mere few days after my crypto revelation, I received news from an Estonian governmental body that I have been granted a prestigious, all-expenses-paid scholarship for my studies abroad.
The scholarship provider paid the tuition fees of the program directly to the university, but the bursary for covering the living expenses was to be dropped to my own personal account. An ideal arrangement, I thought. Instead of leaving the money in my regular deposit account, yielding me a meager 1% return a year, I could allocate it more productively by investing it into the cryptocurrency market. To cover the necessary day-to-day expenditures in London, I figured I’d sell the virtual coins back for fiat on an as-needed basis.
And so it came to pass. On September 1st, 2017, I poured the first installment of the stipend, roughly about 15,000 dollars, into crypto. Forgetting all words of wisdom I’ve heard on risk management and the necessity of diversification, I put all my cards on a single altcoin named ripple.
The decision to invest in that specific currency wasn’t based on sound logic and thorough research. God knows I didn’t know anything about the underlying technology, nor did I even have a vague understanding of the problem the protocol was supposedly solving. It was nothing more than the appeal of owning thousands of coins, rather than a few, that proved to be the decisive factor. A single token of ripple cost 25 cents, meaning that my initial investment yielded me 60,000 of these altcoins. Sounds much fancier than owning 3 bitcoin, doesn’t it?
The issue with gambling is that it’s just that. Gambling. In no more than two weeks after my initial purchase, ripple had lost more than a third of its value. And because the entirety of my net worth was tied to this one coin, so had I. Saying that I panicked would be putting it mildly. Having lost way more than I could afford, I was petrified. Even without the losses, my scholarship would have barely lasted me the year in London. Now, with almost a third of it gone, it would be necessary to get a part-time job towards the second half of my studies. Either that, or starve to death.
At this point, a rational person would have cut his losses and pulled his funds out of this wrecked market. I’m not a student of reason, I learned. Instead, I did what each and every book on investing ever written encourages against. I started to actively day-trade with the uninspiring goal of breaking even. In between my machine learning lectures and statistics assignments, I devoured books on technical analysis and market psychology. Twitter proved to be invaluable, too, with its endless supply of tips and tricks from the self-proclaimed experts and analysts. The actual trades I usually reserved for the mornings, trying to catch the window of time my brain worked best.
Several weeks in, I felt like I was making considerable progress towards recovering my initial investment. At least on paper. In reality, the ghastly exchange fees, which took a significant percentage out of every transaction, cut into my earnings, rendering the whole operation futile. I simply needed more capital to implement my short-term investment strategies, and I’d be in business. Fortunately, I knew just the place to get it.
Enter the loan. From 2016, the United Kingdom started to offer full-time master’s students studying in the region loans with an exceptionally low-interest rate and favorable repayment structure. I figured that the maximum amount offered for borrowing, 10,000 dollars, would be enough to make my trading schemes profitable. All in all, with an additional small capital injection from my scholarship provider as well, I now had several tens of thousands of dollars in my pouch. A decent sum, I thought. Something I could finally start doing some damage with.
And I did. In a few months, I was up 25%. I suppose a figure such as this would be considered rather respectable, a cause of envy, even, in the traditional day-trading community. However, the cryptocurrency market was up twice that over the same period, establishing me as an underperformer. I didn’t let that faze me one bit, though, still thinking I was the shit. After all, the crypto market was full of people with intellect well above average. The crème de la crème, so to speak. Had to be, how else could one explain the wealth they were accumulating doing next to nothing, while the rest of the society was putting in hard work just to make ends meet. There was no shame in being outwitted by such titans of thought.
The life of a trader soon took its toll on me. By the end of the second month, I couldn’t be recognized as the same person anymore. With the increasing pressure I was under from the college courses, there just weren’t enough hours in the day left to worship the crypto gods. But the market was too alluring to be left unattended. So when the gods started demanding sacrifices, first of the flesh, later of the mind, I obliged.
The first offering — my exercise regime, which dropped from a stable 4 days a week to no days a week. Still, the gods weren’t pleased. So I got creative and tried an idea borrowed straight from the playbook of traditional faith: a flavor of fasting. To save time eating, I replaced solid food with water-soluble powder, which supposedly gives you all the necessary nutrients in one shake. And being of the radical kind, I didn’t replace a meal or two. No, I replaced every meal. Breakfast, lunch, dinner, even the bedtime snack. “To the Moon”, they say in crypto. Already eating like an astronaut, I suppose I was planning on taking the trip for real.
Next up was my sanity. Not unlike the countdown of a failed rocket launch, the hours I spent on sleep were steadily reduced from eight to seven, to six, to five. And more often than not, just as a prematurely scheduled launch, I too failed the liftoff. On the days I did manage to get off the ground, I usually came crashing down in the middle of the flight, experiencing a sudden shutdown of vital life support systems during my final lectures.
Studying the effects of sleep deprivation on the human body is perhaps a rather fascinating area of research. Not so when one takes a first-hand approach to it, though. My ability to focus waned, my deductive abilities dropped to a level of a baboon, and my brain flat out refused to retain any kind of new information that was thrown at it. As if that wasn’t enough, the parts that held stuff like pin numbers and street addresses were seemingly dissolving altogether.
Emotionally, I became unstable and easily agitated, soon picking fights even on my first Tinder dates (there rarely were any further ones). Even delusions started to creep in eventually. At some point, I managed to convince myself that the full set of blonde hair I’ve always identified with was starting to fall out. It’s as if every dollar I made on the market had to be paid for with a strand of hair, I thought. I googled the issue and found that reducing the amount of stress in one’s life ought to counteract the effect. Great, now I was stressing about stress, too.
If I really was losing hair, then there’s one episode in particular that would have resulted in a full shave. Early one morning, my sorry picks dropped several percentage points within the span of minutes. This in itself would have been no cause for alarm, as fluctuations of this caliber were a daily phenomenon. Taking a closer look at the technical indicators, however, I figured that a more serious sell-off would be imminent. I needed to get out of my positions before it was too late.
But it already was. Apparently, other traders had come to the same realization and acted accordingly. The result: the exchange I was tied up with crashed due to the unusually high load, making it impossible to place orders or withdraw funds. What ensued was a day-long dance between myself and the trading site.
The dance had a simple enough choreography, consisting of a mere four steps. Ideally, I would have swiftly executed the following maneuvers in quick succession: log in, move to the order page, place an order, and approve the trade in a confirmation prompt. This time, however, my partner was in a mischievous mood. When I lead her one step forward, she took two steps backward. And like it often is with capricious women, she insisted on taking it slow. Real slow. I mean, hell, it took us no less than five minutes to carry out a single step.
When the ordeal finally came to an end, my portfolio was down more than 10% and I had missed an important assignment deadline. It was about five minutes later, when I caught myself contemplating jumping out of that small 4th-floor window in the library, that I resolved to put an end to my career as a trader. But not as an investor, mind you. I liquidated all my open positions in the market that were designed to be held for the short term and went back to my roots. I was once again all in on ripple.
What followed was a period of relative calm, with ripple’s price hovering stably around the familiar 25 cent mark. The low volatility of the market allowed me to regain my composure, catch up with the university courses, and foster my broken relationships. I was even able to visit the hairdresser again, without excessive worry that the cuts would be permanent. That is all to say, I was content again, so as not to say at peace. For a short while, at least.
Little did I know that I had unwittingly climbed on top of a volcano. One that was about to explode. On December 12th, 2017, ripple enjoyed a 40% uptick, with the market suddenly valuing it at 35 cents a coin at the day’s close. On the 13th, the seemingly irrational increase in demand drove the price even further, from a third of a dollar to about a half. And just like that, in less than 48 hours, my net worth had doubled. In 72, it had already tripled. Finally, by day four, the price stabilized, levitating around the new baseline of 80 cents for the entirety of the next week.
This comparatively uneventful period presented me with an opportunity for reflection, a chance to calm my nerves and ground myself in reality. Interestingly, however, I appeared to be in no need of any tranquilization. It is only in retrospect that I find it surprising. When day-trading, I was completely overwhelmed by the incessant beat of the market, my mood in perfect correlation with it. When the market went up, I was ecstatic, at times even delirious. Down on luck, and I was downright suicidal. Had I seen a psychiatrist, she’d have surely labeled me as a neurotic.
During the recent bull run, on the other hand, I displayed none of these symptoms. My state of mind at the time is perhaps best described as indifferent, emotionally unaffected by the recent tumultuous developments. How can one explain this apparent dichotomy? I believe the explanation to lie in the fact that this time around, I wasn’t an active participant in the market, but rather a passive bystander.
I was no longer the captain of my ship, no longer did I try to follow the mysterious whales that would lead me to the waves of success. Indeed, I had gone down that path, only to come back seasick. So exhausted, in fact, was I of the failed endeavor, that I crashed on the deck and left myself at the mercy of the ocean. And when the vessel inadvertently bumped against a barrel of treasure, I thought it to be a mirage. It had come too effortlessly, too suddenly for a conscientious seaman such as myself. I was distrustful of it, my mind unable to register its contents as real, as something that could be materialized in the real world.
Another eruption, a quick one, but no less fervent. On 21st, after a week of silence, the price shot up to a dollar twenty-five. With my net worth now quintupled, another week of inactivity followed. It was during this time that I flew back to Estonia to spend time with my family over the holidays, my parents picking me up at the airport.
Barely reaching the car, without any prompt from me, my mother burst into an excited babble about cryptocurrencies. This was so out of character of her that I let out an involuntary shriek of terror in response. As if sucked into a Lovecraftian horror story, I was scared shitless by the incomprehensibleness of the situation, unable to fathom the grotesque scene unraveling in front of my eyes. There was no doubt in my mind that a demon had possessed her. The woman next to me couldn’t have been my mother, someone so out of touch with technology she thinks Bill Gates, not Al Gore, invented the Internet.
Evidently, some women from the local salon had become ambassadors for some obscure altcoin, preaching the wonders of crypto to the gullible villagers of Jõgeva — a small Estonian town of 6,000 people. I should have decided right then and there that it was high time to take my riches from the market and sprint in the other direction. Instead, I saw it as an absolute positive — the word has spread to every corner of the world, making the widespread adoption of the technology imminent. And so it was on this cold winter night in Jõgeva that a ritual was performed. Not one of exorcism, but of the satanic nature — a demon was fed. I bought my mother bitcoin for Christmas.
A few days later, on December 27, the market took off again, with the price of my poison of choice breaking the two dollar barrier for the first time by the end of the 29th. The next day, it reached as high as 2,85 USD for a brief moment but was met with some resistance from above, swiftly dropping back to just below two dollars. The year ended on a high note, though, finishing with 2,30 USD. And with that, my net worth had nonupled. Or to put it less elegantly, it had increased ninefold. Or to make it even more clear, if I could previously barely afford a Ford Focus, I could now acquire a Lamborghini. Plus a couple of Focuses for my parents.
The upward trend continued into the new year, with ripple’s price surging well past the three-dollar mark on the 3rd of January, closing at three and a quarter. The next day, the value of the coin reached almost four dollars. With the price now at its peak, I had accumulated a wealth of just a tad over half a million dollars. To put that into perspective, considering that the median wage in Estonia is roughly about 1,200 USD before taxes, I could have comfortably lived off my newfound fortune for over a third of a century. That’s more years than I have firsthand experience of. A decade more.
Unfortunately, I decidedly didn’t put the recent fortuitous events into a larger context. I couldn’t have, with my ability to concentrate severely impaired by the incessant blustering of the media. On Twitter, the charlatans were extrapolating the trend months into the future, yielding curves that were literally venturing off the charts. On television, the pundits were deeming 2019 the “year of crypto”. Even Jim Cramer, after years of denouncements, recanted and turned bullish on bitcoin. On Reddit, the goons were posting pictures of their favorite coins permanently etched into their skin. It was a cultural zombie apocalypse, and I had been bitten.
With most of my brain eaten away by the insidious disease, I was able to register growth of a particular kind only — exponential. Having witnessed the size of my portfolio increase a whopping 16 times, the chunk of money I would have made from an additional 17th time felt like petty cash. No matter that it would have resulted in an amount equal to my initial investment, I guess. Operating in units much more coarse, my mind could only keep track of the number of times it had seen its investments double — four.
But I needed the fifth. Understandably so — it was the difference between being labeled a several-hundred-thousandaire and a full millionaire, fair and square. As if insulted by the mere thought of the former, I vowed to emerge as the latter, arranging for the automatic liquidation of my virtual assets in response to my investments hitting seven digits. Note the word automatic — so certain was I of the continuation of the precipitous rise of the market that I feared the necessary price point would swoosh by too fast for me to manually execute the sell order on time, losing the symbolism provided by an even million.
I was in no conflict about the decision, there was no second-guessing on my part. If anything, a feeling of unease surfaced in response to the thought of not being associated with the crypto space. With the price at its peak, it was as if the dollar didn’t even exist anymore. Pulling out of crypto… into what? Or perhaps more relevantly, then what?
The once obscure, independent act conceived a decade ago had grown into a salacious spectacle of enormous magnitude. Everybody hustled for a spot on the show, our senses much too numbed from the titillation to reflect on the increasingly unreasonable cost of the ticket. And as the behavioral etiquette of any festival worth its salt demands, you better drink yourself into a stupor from the Kool-Aid and rave with the crowd. Or you’ll be thatguy — the timid fool on the dancefloor, the odd duck among a group of guys whose radiating self-consciousness acts like a bulwark for approaching women. The one spoiling all the fun.
Another truism about festivals: they come to an end. And when they do, the recrements of catharsis will be all that’s left on display — the bushes glistering with used condoms as if bearing pink fruit, the stacks of shit pouring out of the non-flush toilets that we swear we didn’t contribute to, and all the piss, sweat, and vomit that is slowly evaporating and thickening the air to a degree that you can almost start swimming in it. Everybody was well aware of the perils at the end of the festivities, but nobody knew when’ll the last encore be performed. Intoxicated, we believed ourselves to be smart enough to pick up on the cues and went on enjoying the show. But we weren’t.
On the 5th of January, the coin’s value dropped down to almost three dollars, and the price curve continued to rub that point uneventfully for the next couple of days. On January 8th, I perfunctorily pulled up the trading charts to pass the time during breakfast. This proved to be a horrid mistake, for I almost choked on the porridge, startled by the shocking events I was witnessing. The time it took for me to consume the meal was enough for ripple’s price to drop 60 cents, or close to 20% in value. But it didn’t stop there. A few days later, the two-dollar mark was breached from above.
With that, the steepest trail of the volcanic mountain had been descended. And while the most precipitous slopes of the journey are usually the toughest, their strenuosity is somewhat countered by their thrilling nature. One doesn’t existentially reflect on his position in the midst of a hazardous rappel — instincts take over and a man is reduced to an animal, barely registering any of it at all. Moreover, is it not often the case that one rappels downward with the intent to come about a better route, one that can be utilized to ascend ever higher? One step backward, two steps forward.
It took another month and then some for the price to gradually drop another dollar, but by mid-February, it had come to be. From there on out, the appropriate units to discuss ripple’s worth were once again cents. The gradual decline continued into March, and by the end of the month, the coin was only worth half a dollar. The price retaliated in April, almost making its way up to an even buck. A feint — by mid-summer, it had halved again. And halved once more by the beginning of the school year in September, measuring just cents above the familiar quarter.
In great journeys, it’s the long stretches of nothingness, the regions of void that have repeatedly proven to be the undoing of men. It is not the arduousness of such a terrain that is the culprit, but rather the deceptiveness of its nature. This is exhibited all the more clearly if it follows a particularly rough descent of a cliff, as it did in this case. A man shaken by freefall isn’t best positioned to measure the incline of the plane he’s now standing on — he’s landed to live another day, that’s all that matters, the rest does not yet compute.
In such a situation, one can thus believe himself to be making progress, to be working his way upwards, while in actuality he’s already following a passage back to camp, retreating from the cause unknowingly. Weren’t similar deceitful forces at play when the vagabond Christopher McCandless, after an adventurous period of wandering, finally settled down in the Alaskan bush? For three unremarkable months he stayed there, in an abandoned bus, no less, understanding himself to be closing in on life. But he was taken as a fool, for it was death that was closing in on him.
Similarly, after the near-vertical drop, the subsequent steady decline in price didn’t fully register. The mind knew that the market was in recession, but the heart was hopeful that it was merely in stagnation. As Nixon would put it, “I’ve made so many bad judgments — the worst ones, mistakes of the heart, rather than the head… but a man’s head must always rule his heart.” And like the president, I, too, was incapable of internalizing this wisdom by merely learning from the mistakes of others. So I made my own, stubbornly holding on, with nothing to do but wait — wait for an absolution that would never come.
What had begun as a campaign to conquer the mountain had ended in defeat. I was once again standing at the bottom of it, with the flag reserved to be erected at the summit still in my hand, unplanted. It has since become clear that I had indeed reached the peak, only to shy away from it in ignorance. But up in the mountains, with the Moon so enormous and so wonderfully glaring down on you, is one not to believe that God himself has lit it, for the moonlight to guide you the way to ever higher crests? Or dare I ask, is one not to be forgiven for trying, just this once, to reach for the Moon itself?
PS. It wasn’t all for naught, as I did make a couple of bucks in the end after all. Just enough to buy a couch.