I lost £2,000 of my lockdown savings investing in Dogecoin

AFTER seeing a mate make a decent return on investing in cryptocurrency, Frank Bird decided to try his luck too.

Sitting on £2,000 saved during the coronavirus lockdown, the 27-year-old bought Dogecoin when it was rocketing in price earlier this year.

But cryptocurrency prices can go down as well as up, and their value can fall extremely quickly and by a large amount.

The UK’s financial regulator has warned that people risk losing all of their money if they invest in bitcoin and other cryptocurrencies – and that’s what happened to Mr Bird.

The price of Dogecoin has plummeted since he invested.

He faces losing almost all of the money he put in if he withdraws it at the current price.

That means all of the money he saved during lockdown is tied up in Dogecoin in the hope that the price rises again.

The insurance executive from London told The Sun: “I was advised by a friend to invest in Dogecoin and there was also a lot on social media about it and so seemed like a good idea.

“I thought I could make a quick profit by putting in my lockdown savings during the first week of May and then withdraw after a week or two.

“But the price tanked almost immediately, making it impossible for me to take out the money without losing out.

“The money is still in Dogecoin and I follow the price closely, but I can’t touch that money now and may have to cut my losses – it crashed again last week –  which is frustrating.”

The price of Dogecoin hit a record high on May 8 and was worth $0.7376 according to Coinmarketcap and Mr Bird bought up Dogecoin at around $0.71.

But the cryptocurrency has since dropped in price by 72% from the all-time high and is currently worth $0.2039.

Other cryptocurrencies like Bitcoin have also fallen from record highs earlier this year.

“I saw a friend make loads of money. They put a lot in and it seemed to go up all the time. But obviously I bought at the top,” said Mr Bird.

Dogecoin originally started as a joke but has become increasingly popular, gaining backing from famous faces like Elon Musk.

The entrepreneur behind Tesla regularly tweets about Dogecoin which more often than not pushes up the price and has earned him the nickname the Dogefather.

While Mr Bird wasn’t influenced to invest because of Mr Musk, he was happy whenever the tech guru tweeted: “I knew it would affect the price!” 

Mr Bird was inspired by Glauber Contessoto, an amateur investor from Los Angeles who has made millions from investing in Dogecoin, earning him the Dogefather nickname alongside Mr Musk, as well as “Slumdoge Millionaire”.

He said Mr Contessoto, who has tens of thousands of followers on Twitter and a similar number of YouTube subscribers, helped Dogecoin seem accessible, but admits “I still don’t understand it”.

Young people are more likely to think that investing is the best way to grow their savings, according to research from investment platform InvestEngine.

Lockdown boredom, new apps for investing like Robinhood that make it easier than ever to buy and sell, as well as rising prices across the crypto market, have sparked a growing interest in investing among young people.

The FCA warned in March that young investors are taking on high-risk investments like cryptocurrencies, but most are not likely to handle large losses.

Research by the regulator found that more nearly two thirds said that a significant investment loss would have a fundamental impact on their lifestyle, now and in the future.

Managing director of the InvestEngine Andrey Dobrynin said: “When it seems like everyone around you is profiting on a trend, assets like these can lure investors – particularly novice investors – into a false sense of security.

“For all the winners of the novel ‘casino approach’ to investing, there are also losers – and lots of them. More often than not, they are amateurs, who don’t yet have an understanding of the fundamentals of investing,”

It’s not the first time that Mr Bird has tried his luck with cryptocurrency investing.

He put around £400 into another cryptocurrency called Ripple a few years ago when it was going up in price.

But the previous cryptocurrency boom in 2018 also turned to bust for the amateur investor and he ended up cashing out with just £50.

“I sold at a loss in the end. It was a good introduction to how volatile cryptocurrencies can be and didn’t leave me with good taste in my mouth,” he said.

Before being tempted to invest in crypto again in the latest boom – and getting burned a second time – Mr Bird also started investing “properly” he said.

That has involved putting cash in stocks and shares of companies in renewable energy, an area he was more familiar with working in the shipping industry.

He did that through a stocks and shares ISA with Hargreaves Lansdown, a well known investment platform.

Investing in stocks and shares is still a risky business as you can still lose money, but it is less risky than cryptocurrencies because the stock market is not as volatile.

It’s more risky than having cash in a savings account, but long-term investing in the stock market over many years can grow your money more than earning interest on cash.

Mr Bird told The Sun he regrets investing in Dogecoin, which he bought through a crypto exchange called Binance that has since been banned in the UK by the FCA.

He said: “I don’t know a lot about investing in cryptocurrency. It’s a shot in the dark trying to ride the crest of a wave you actually know nothing about.”

He now wishes that he had kept hold of the £2,000 cash as savings or used it to pay off some of his student loan.

“Having a buffer of two grand would have been nice,” he added.