Image: REUTERS
Image: REUTERS

* Lance Boyle is a pseudonym. Get over it.

Before you do anything, watch this video. Or, if you know it all, move on to the next paragraph.

When we last spoke, I had been playing around with a demo account. I found out pretty quickly that trading cryptocurrencies such as Bitcoin and Ethereum by CFD was not for amateurs like me.

My demo account looks like this at the moment:

Which is disaster, considering I started out with R2.5m just over a week ago. And this is after clawing back some losses.

So I know CFDs are not for me. But what about buying and selling the cryptocurrencies themselves? I have dipped the very ends of my toes in and I am happy to report that I have neither lost nor gained anything. In a market that I barely understand, I count that as a win.

The problem with playing in this market is that it is hard to make out what the fundamentals are other than novelty and scarcity. There is utility, but who knows how where and why people are spending it. There are no Federal Reserve stats on this.

There are a lot of doomsayers about who believe that a Bitcoin event called Segwit is going to tear the currency to pieces.

But even with the recent losses, Bitcoin is very much higher than it was a year ago as this graphic illustrates:

Here's how Bloomberg is reporting it in this article:

The notoriously volatile cryptocurrency, whose 150 percent surge this year has captivated everyone from Wall Street bankers to Chinese grandmothers, could be headed for one of its most turbulent stretches yet

In essence, this Segwit event — which is set to occur on August 1 — could lead to a "fork" where two sets of developers go their separate ways and continue to generate Bitcoin on two separate branches.

In a market where fundamentals, other than scarcity and novelty, are few and far between, an event like this is causing nightmares and the bears have been running.

So, buying opportunity then?

Here's last week's diary:


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