A crypto enthusiast who took out a six-figure loan to purchase cryptocurrencies has seen them lose almost 85% of their value.
Investment Lost with NEO, Stellar, Litecoin, Ethereum, and Others
On Monday, Reddit user “Cryptohomie,” a 32-year-old living in Abu Dhabi, UAE, posted a photo of his bank repayment schedule to the cryptocurrency subreddit, according to News.com.au.
The photo shows a document from Emirates Islamic Bank that lists monthly repayments of 8,194 dirham ($3,067) until December 14, 2021. The original loan is listed as 338,000 dirham ($126,500) with a total outstanding amount of 393,296 dirham ($147,200) including interest.
“Here is my bank installment related to the loan I took to invest in crypto,” Cryptohomie wrote. “Still three-and-a-half years to go until I’m freed. Until then, I’m working for nothing and I’m at 85 per cent loss. I hope it gives you a lesson.”
Of note is that the money was not used to purchase Bitcoin, but instead NEO, Stellar, Litecoin, Ethereum, “and some shitcoins that lost 95 per cent of their value already.”
Looking back, NEO has lost about 90% of its value since peaking this past January, Stellar is down about 75%, Litecoin has dropped about 85% in value, and Ethereum has experienced a decline of around 80%. In relation, the price of Bitcoin has fallen by almost 70% since hitting all-time-highs around $20,000 last December.
Overall, the total market capitalization of the almost 2,000 cryptocurrencies tracked by CoinMarketCap have dropped from $800 billion to under $200 billion at the time of publishing.
Moving forward, despite his losses, Cryptohomie is still involved in the space. He said he was “now mostly into” NEO, Ontology, Elastos, Stellar, and HPB. The user explained that the seed money for his investment was a “simple loan” that banks give “almost instantly in UAE.”
“You can get $100,000 within few days on your account without much verification,” he said.
Reddit’s Response to Cryptohomie’s Losses
The response from the Reddit community was mixed. Some were sympathetic, not intending to make the situation worse for Cryptohomie than it already is: “I don’t think there’s anything we can say that you don’t go to sleep thinking about already,” one user wrote.
But other perspectives related to the backlash received earlier this year when certain debit/credit card providers began banning the purchasing of cryptocurrencies with their cards. And some tied Cryptohomie’s seemingly risky purchases to why the market reached such highs at the end of 2017.
One user wrote: “So this is why we hit $US20,000.” Another noted that “people complained” when banks stopped allowing cryptocurrency purchases on their cards, but reiterated that those moves were “because of things like this.”
“Since this last run I’ve wondered how many people did this sort of thing and how much banks have loaned out for crypto. I imagine there have and will be quite a bit of credit/loan defaulting.”
Last December, at the height of the cryptocurrency price run-up, a U.S. securities regulator warned people were taking out loans to buy digital currencies:
“We’ve seen mortgages being taken out to buy Bitcoin,” Joseph Borg from the Alabama Securities Commission said. “People borrow money. People do credit cards, equity lines.”
Borg added that the problem was that “innovation and technology always outruns regulation. This looks like tulips from Holland back in 1637.”
Featured image from Shutterstock.