Cryptocurrency Bubble Bursts, Price Index Plummets 80% to its Lowest Ever

Cryptocurrency Bubble Bursts, Price Index Plummets 80% to its Lowest Ever

Digital Gold

The virtual-currency mania of 2017 -- fueled by hopes that Bitcoin would become “digital gold” and that blockchain-powered tokens would reshape industries from finance to food -- has quickly given way to concerns about excessive hype, security flaws, market manipulation, tighter regulation and slower-than-anticipated adoption by Wall Street.
Like their predecessors during the internet-stock boom almost two decades ago, cryptocurrency investors who bet big on a seemingly revolutionary technology are suffering a painful reality check, particularly those in many secondary tokens, so-called alt-coins.
As virtual currencies plumbed new depths on 12/09/2018, the MVIS CryptoCompare Digital Assets 10 Index extended its collapse from a January high to 80 percent. The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000.

Virtual currency in the form of Bitcoin, Ether, among others registered their biggest fall ever on Wednesday when the collective cryptocurrency index by almost 80 percent.

The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000, according to a report by Bloomberg.

Like their predecessors during the internet-stock boom almost two decades ago, cryptocurrency investors who bet big on a seemingly revolutionary technology are suffering a painful reality check, particularly those in many secondary tokens, so-called alt-coins.

“It just shows what a massive, speculative bubble the whole crypto thing was — as many of us at the time warned,” Neil Wilson, chief market analyst in London for Markets.com, a foreign-exchange trading platform told Bloomberg. “It’s a very likely a winner takes all market — Bitcoin currently most likely.”

Wednesday’s losses were led by Ether, the second-largest virtual currency. It fell 6 percent to USD 171.15 at 7:50 a.m. in New York, extending this month’s retreat to 40 percent. Bitcoin was little changed, while the MVIS CryptoCompare index fell 3.8 percent. The value of all virtual currencies tracked by CoinMarketCap.com sank to USD 187 billion, a 10-month low.

The virtual-currency mania of 2017, fuelled by hopes that Bitcoin would become “digital gold” and that blockchain-powered tokens would reshape industries from finance to food, has quickly given way to concerns about excessive hype, security flaws, market manipulation, tighter regulation and slower-than-anticipated adoption by Wall Street.

Crypto bulls dismiss negative comparisons to the dot-com era by pointing to the Nasdaq Composite’s recovery to fresh highs 15 years later, and to the internet’s enormous impact on society. They also note that Bitcoin has rebounded from past crashes of similar magnitude.

But even if the optimists prove right and cryptocurrencies eventually transform the world, this year’s selloff has underscored that progress is unlikely to be smooth.

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero 

Bitcoin’s meteoric rise last year had many observers calling it one of the biggest speculative manias in history. The cryptocurrency’s 2018 crash may help cement its place in the bubble record books.

Down about 70 percent from its December high after sliding for a fourth straight day on Friday, Bitcoin is getting ever-closer to matching the Nasdaq Composite Index’s 78 percent peak-to-trough plunge after the U.S. dot-com bubble burst. Hundreds of other virtual coins have all but gone to zero — following the same path as Pets.com and other red-hot initial public offerings that flamed out in the early 2000s.

While Bitcoin has bounced back from bigger losses before, it’s far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest. Bulls point to the Nasdaq’s eventual recovery and say institutional investors represent a massive pool of potential cryptocurrency buyers, but regulatory and security concerns have so far kept most big money managers on the sidelines.

“You’ll have to see the market reverse before you see” institutions pile in, Peter Smith, chief executive officer of Blockchain Ltd., which introduced a crypto trading platform for professional investors on Thursday, said in an interview on Bloomberg Television.

Read more on how Bitcoin’s rally compared to history’s biggest bubbles.

Bitcoin declined as much as 4.2 percent to $5,791 on Friday, the lowest level since November, according to Bloomberg composite prices. The cryptocurrency recovered on Saturday in Asian hours, rising 8.6 percent to $6,397 at 11:35 a.m. in Tokyo, according to Bitstamp.

Still, Bitcoin is down around 55 percent this year, according to Bitstamp. Other coins including Ether and Litecoin slumped more, while the combined value of tokens tracked by CoinMarketCap.com declined to $236 billion. At the peak of crypto-mania, they were worth about $830 billion.

While it was difficult to find fresh catalysts for Bitcoin’s drop on Friday, hacks at two South Korean exchanges and a regulatory clampdown in Japan have weighed on sentiment in recent weeks. Regulators around the world have stepped up scrutiny of cryptocurrencies on concern that they’re a breeding ground for illicit activity including money laundering, market manipulation and fraud.

Lesser-known tokens have been hit the hardest. Dead Coins lists around 800 that are effectively worth nothing, while Coinopsy puts the tally at more than 1,000. Fewer than 4 percent of coins with market caps from $50 million to $100 million were successful or promising, according to a March analysis from ICO advisory firm Satis Group.

Bitcoin may not go to zero, but it’s “very much” a bubble, Robert Shiller, the Nobel laureate economist whose warnings about dot-com mania proved prescient, said in an interview with Bloomberg Television’s Tom Keene on Tuesday. Last year’s Bitcoin surge was “not a rational response,” he said.