Bitconnect warning! Capital release truth exposed
In this video I look at the maths behind the Bitconnect capital release. How the massive increase in Bitcoin price has had a big impact on the Bitconnect invested amount over time.
Welcome back to CraveThatCoin,
First of all I would like to thank each and every one of you who watched my last video on Bitconnect, it far exceeded my expectations reaching over 10,000 views in just 2 week.
In this video I'm going to raise something that no one is paying attention to, this is going to shock many and upset even more but unlike some youtubers I refuse to promote Bitconnect and profit from my viewers risk. You will not find any referral link from me. I'd rather look at Bitconnect without any bias and try and work out if its the amazing investment everyone claims.
When you invest in Bitconnect the value of your Bitcoin at the time is converted into to $. They then use your $ investment to invest in the cryptocurrency market using their trading bot. They then share profits with you in the form of interest much like a conventional bank does. However, unlike a conventional bank they pay you daily interest which averages out to be around 1%, this is unheard of in conventional investments and is what makes Bitconnect so appealing to many. After around 6 months depending on your investment amount, Bitconnect will pay you back your initial $ investment. This is known as capital release. This is a big stand out feature of Bitconnect as people see it as a lower risk investment as you get your initial capital back.
Now you know how Bitconnect works let's move on.
Yesterday our good friend Trevon James post a video about his first Bitconnect capital release. I am going to show you some quick maths behind this and you can decide for yourself whether or not Bitconnect has been a good investment.
In Trevons video we see his $5100 capital release which he is very happy to show his viewers. As Bitconnect investments of this amount have a capital release date of around 6 months we know that he invested his $5100 on around the 13th of June.
Let's go ahead and look at the price of Bitcoin on this date. As you can see the price of 1 Bitcoin was $2744.75. As he invested $5010 in Bitconnect at the time, he would have deposited around 1.858 Bitcoin.
Now 6 months later he has had his capital release of $5010. If he was to use this to buy back into Bitcoin he would get just 0.297594 Bitcoin. That's a insane 84% less Bitcoin than what he invested into Bitconnect 6 months ago. The reason why he is left with so much less Bitcoin than he put in is because the price of Bitcoin has gone up so much since his investment 6 months ago.
Let's assume that Trevon decided to hold his Bitcoin until now. His initial 1.858 Bitcoin today is worth a mind blowing $31,307.27. He has effectively sold his $31,000 asset for $5010. On most Bitconnect videos I see, people are focusing completely on the $ amounts and not looking at the actual Bitcoin amount.
Unfortunately there is more to this story. On the 1st of August Bitcoin was forked to create Bitcoin cash, this happened during his investment. As his 1.858 Bitcoin was in Bitconnect's control they got the free 1.858 in Bitcoin Cash. If he held the Bitcoin he would have got the free 1.858 Bitcoin Cash which today is worth $3507.53.
That means if Trevon held onto his 1.858 Bitcoin instead of depositing it 6 months ago in Bitconect as a $5010 investment he would now have $34,814.80
The question now is did his $5010 Bitconnect investment make enough interest over 6 months to make up for that $34,814 loss in value. If he withdrew his interest to Bitcoin every day he may have managed to capture some of that rise in Bitcoin value but it is impossible for me to calculate without knowing his withdrawal amounts and dates. But it's safe to say that the $34,814.80 loss in value is going to be hard to make up in interest payments considering the interest would be on the comparatively small $5010 value of his initial investment 6 months ago. As with my last video I am not saying that Bitconnect is or isn't a good investment as there's so many factors to determine such as people, amounts, timing and strategy.
I really hope this video helps to demonstrate that when looking at Bitconnect as a investment it's vital to pay close attention to the Bitcoin amount invested VS gained and the price of Bitcoin throughout your investment. This is the only way you will know for sure if your Bitconnect investment has been profitable in real terms. If you are looking at the $ amounts only you are not getting the true profit or loss with Bitconnect. For example if you're looking at the $ amount this video would be 30 seconds saying you invested $1000 and got $1000 back after 6 months but that would be ignoring the huge $32,800 loss in Bitcoin value.
This should also highlight 1 way it's been easy for Bitconnect to survive over the last year with Bitcoins rapid increase in value and the highly successful Bitcoin Cash fork. Bitconnect have benefited massively from this which has made it easy for them to pay out interest withdrawals. The real test for Bitconnect is going to be how they handle future crashes in the Bitcoin price which is likely to happen at some time in the near future.
I hope you enjoyed this video, if you liked it please give me a thumbs up and leave a comment with your thoughts.
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