Mark Grubski isn’t a crypto bro — he’s a crypto grandpa.
“I am not supposed to be involved in crypto because I am a baby boomer,” he says.
“I have to say, I love it.”
But it’s a fraught relationship, with Mark investing at “totally the wrong time” when prices of these decentralised currencies were at their last peak in mid-2021.
“I was typical investor on a hype,” he admits.
The price of the best-known cryptocurrency, Bitcoin, started dropping from its record high of around $US65,000 ($102,000) in late 2021.
Eventually, it spectacularly crashed. Other crypto currencies generally followed this trend.
Now there is a glimmer of hope for Mark’s nest egg, which today includes about 20 different cryptocurrencies.
Bitcoin — one of the “big daddies” as Mark calls it — is back up to more than half its peak, trading around $US34,000 this week.
Others like Ethereum, Solana and the much-derided Dogecoin are also rising.
The question is whether this is just another boom and bust cycle or cryptocurrency’s final moon landing.
Why are prices currently rising?
As one local fund that helps retail investors get into crypto puts it: “market sentiment is everything”.
“We seem to be stepping over some of the negative news,” Digital X chief executive Lisa Wade says.
This includes the appearance of Sam Bankman-Fried before United States courts, as the former industry darling deals with the reckoning of the fallout of his fund, FTX.
The collapse of FTX in 2022 added to woes that year from the “death spiral” of the Luna stablecoin.
“We actually crashed and underperformed by about 100 per cent,” Ms Wade says.
In recent weeks, Bitcoin was boosted by news that one of the world’s biggest asset managers, Blackrock, has applied for a licence to run an exchange-traded bitcoin fund.
“This is a big deal,” RMIT Blockchain Innovation Hub’s deputy director Dr Darcy Allen says.
Blackrock has not actually confirmed what it will do if it is granted a license by US regulators but its application appears to be a good enough signal for the market.
“What this means for investors is that cryptocurrency markets are likely to have an air of regulatory legitimacy around them,” Dr Allen explains.
Moves towards regulation, and legitimacy
There have also been moves abroad and in Australia to more tightly regulate cryptocurrencies in a similar way to more traditional financial products.
When FTX collapsed, mum and dad investors in Australia who sunk their self-managed superannuation funds into crypto via firms that dealt with FTX found themselves with little recourse.
Regulators, such as the Australian Securities and Investments Commission (ASIC), have long been warning people that this new-age style of investment is a “wild west”.
Last month, the federal government put out a proposal paper recommending that crypto exchanges and platforms be subject to existing financial services laws.
Amongst other changes, that would require exchanges to have Australian Financial Services Licences (AFSL) to operate.
Cryptocurrency initially came about as a decentralised alternative to currencies, such as the Australian dollar, that are tied to nation states and regulators.
Diehards still question whether regulation is the right route, because it would mean more intervention.
But those hoping it becomes entrenched in traditional financial markets are welcoming regulation, including Australian fund Digital X.
Its chief executive describes Bitcoin as like any other asset, because it can “store wealth, be exchanged, and traded for credit”.
“Not all crypto is created equally. That’s why we filter our portfolio from 19,000 down to five, six or seven,” Ms Wade says.
Digital X, which already has an AFSL, doesn’t recommend people put more than 5 per cent of their portfolio into this asset class.
Its fund is still underperforming by around 35 per cent.
Cryptocurrency sceptics remain
As regulation looms, sceptics still dispute crypto’s fundamental legitimacy.
“It’s a classic speculative bubble,” the University of Canberra’s John Hawkins says.
He argues that — unlike property investment where you get a house that you can live in or rent out, or stocks that are tied to a company which might produce profits — cryptocurrencies have no inherent income-generating asset behind them.
“So when people get jittery, the market crashes,” he argues.
He believes the federal government will have a hard time implementing any flagged laws.
“It’s all happening in the ether, not in Australia. So it’s a difficult task to regulate,” he explains.
“Don’t gamble money you cant afford to lose is always good advice.”
That is also what Mark Grubski now tells others, after buying at the peak taught him a lesson.
After the crash and the partial rebound, the retiree is taking a non-emotional approach to cryptocurrency. He has kept his money in it since the market dived.
“I had to go through the bottom of it, and then we’ll see what’s going to happen at the top,” Mark says.
“At the moment, I want to make a little bit quicker money and then for the long term buy Bitcoin at the next dip because now I know how to do it.
“In my mind, crypto is giving me that opportunity of still being retired but be actively involved in something tangible.
“I treat it as a legacy that I want to leave for my grandchildren and children.”
