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Cryptocurrency's 80 Percent Plunge Is Now Worse Than the Dot-Com Crash (bloombergquint.com)
Zorro shares a report from BloombergQuint: The Great Crypto Crash of 2018 looks more and more like one for the record books. As virtual currencies plumbed new depths on Wednesday, 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. 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," said Neil Wilson, chief market analyst in London for Markets.com, a foreign-exchange trading platform. "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 $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 $187 billion, a 10-month low. "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," reports BloombergQuint. "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."
"It just shows what a massive, speculative bubble the whole crypto thing was -- as many of us at the time warned," said Neil Wilson, chief market analyst in London for Markets.com, a foreign-exchange trading platform. "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 $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 $187 billion, a 10-month low. "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," reports BloombergQuint. "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."
All of those people stealing bitcoins just got shafted a lot harder than the average small-scale owner. And it makes payout for all that ransomware WAY cheaper!
"There is more worth loving than we have strength to love." - Brian Jay Stanley
This is the 4th or 5th time it's plunged like this(percentage basis) since 2010. Why is the outcome this time different? more participants? more awareness? higher market caps? all of those things also bring along new players, lobbyists, proponents and capability to ensure the cycle repeats at some point.
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They're a waste of energy.
Why don't governments allow people to print real money? Just make printing each note a unique and a complicated process that lower intellect folks could barely print off minimum wages/well fare, and creative minds can prosper.
NASDAQ companies - those that survived - actually produce goods and services; things of value that people want. Recovery is *almost* guaranteed as those businesses recover.
Cryptocurrencies offer nothing but themselves as the product, and once the public loses faith in their value and ability to exchange them, they have nothing to base a recovery on. All they can hope for is more speculation from people too dumb to learn the lesson the first time.
=Smidge=
...get yer tulips....cheap!
Tulips have at least some base value, and dont consume continuous and massive amounts of energy just to allow their sale to be recorded. ;)
Tulips are a WAY more sensible investment than Cryptocurrencies
BTW, the story is also BS. The .com crash wiped many many more investors (well, wiped out in a way, because money is only transferred, there were just as many winners - this is often forgotten). A lot of this 'lost value' in cryptocurrencies was never traded, it was just huge percentages of the total coins held by a few whales.
ie: those static amounts went up, went down, but were never realized. This makes a big difference.
Then again, boom bust cycles are a great tool for those in control to extract money from the middle classes - who are always the investors who lose out (and dont get bailed out, ever..) - which is why you will never see effective regulation of such things.
Like being able to transfer value across the Internet without a centralized authority? That kind of good or service?
"Everything is worth what its purchaser will pay for it." - Publius Syrus
When many want to buy crypto-currency, and few are willing to sell, price goes up. We saw that.
When few want to buy crypto-currency, while many are looking to sell, price goes down. Now, we're seeing this.
It appears to have great possibilities to solve some problems
Unfortunately, today's crypto currencies seem to only be used for speculation, or to buy drugs or other black market stuff
One of my good friends is a glassworker. He's trying to create an alternative currency based on tokens that are collectable, handmade pieces of art http://www.astarshipineverygar...
In theory, I like alternative currencies
In practice, I'm well aware of the difficulties
> no different than gold or any fiat currency.
If you have any income, you have to pay taxes in fiat currency.
If you keep refusing to pay, eventually they'll put you in jail (after they first seize your assets). Almost everyone NEEDS fiat currency, so that's one big difference. There will always be someone who needs to pay taxes, so there will always be someone who needs dollars. They'll give me something of value in exchange for my dollars in order to pay their taxes.
Pop the battery out of your phone for a second. See those shiny things where the battery connects to the phone? That's gold, it's not Buttcoin. Have any computer motherboard or PC card laying around? See that shiny yellow stuff? That's gold. Gold is needed for real, actually valuable uses.
Its not a digital evolution when govs can track it AC.
Domestic spying is now "Benign Information Gathering"
I don't understand it either. But then again everyone on here was saying how badly the iPod was going to flop when it was released. I think a lot of the posters here couldn't even fit in over at 4chan.
Only the State obtains its revenue by coercion. - Murray Rothbard
I just looked and the "currency" bitcoin is still worth $6355 per coin.
I mean i threw them in the garbage back in the day when they were worth only a few cents per coin, so i would think that its still MASSIVELY over valued and can fall much, much further.
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Bitcoin is up almost 55% year-on-year.
Yes, it's volatile. No, it hasn't crashed.
It was all going so well until the WikleVI decided to open Gemini and have funds which they claim are pegged to the dollar.
You CAN'T HAVE an alt.coin or digital fund pegged to the dollar without being... the US Government!!! I know, it seems silly to have to say it, but if all you had to do was invent a name... maybe something stupid... like "twoface" or "the joker" or "the riddler" or "gemini" or "Winklevii" and then issue coinage and claim it's worth EXACTLY a dollar because "we're storing dollars"... ...then every lesser developed country would do it. Do you think south American countries going through 1000% inflation wouldn't LOVE to peg their "petro-currency" to the dollar?
Oh WinkleVii, WinkleVii, WinkleVii. You're not just sore losers (yeah, Facebook, right?) but now you're also bitcoin losers and Gemini fund losers.
Time to go out there and buy more matching suits!
E
It's equally valid to say that cash has increased in value by 400% against cryptocurrency. You should buy dollars now! Disclaimer: some cryptocurrency people are saying that the current value of cash is just a bubble.
In other news, cash held fairly steady against other easily tradable commodities, with no major movement.
When a bunch of people decide to play musical chairs, they are gambling on whose gonna get cast aside and whose going to get a chair. That's cryptocurrency, except that people used real money to buy their spot in the game.
As long as such a game goes on, people who've already "invested" (bought-in to the poker game) imagine that they are "investing" rather than gambling, and they will happily encourage more people to buy-in (which drives up the value of the crypto tokens of those who already own them). Unlike an actual investment, however, at the end of the exercise there is no there there - there's nothing of any intrinsic value for the last people in the game to claim actual ownership of. This is a classic pyramid scheme (which is why such schemes are generally illegal in the US) which, like a perpetual motion machine is completely impossible and is 100% certain to burn the later generation of participants - in fact the cashing-out of some early investors is great advertising which leads to a later generation of fools investing. Google: "Ponzi"
I don't see an 80% plunge ending companies and millions of jobs like the tech bubble bursting did.
Joe Sixpacks, defender of the common man.
It's been exactly like the tulips. The comparison is astounding. I suggest reading up on both, it's facsinating
Joe Sixpacks, defender of the common man.
Yeha, HODL It isn't bigger, and it will never be mainstream currency. It isn't secure or anonymous. Wallets get hacked. People computers get viruses. SO on.
Joe Sixpacks, defender of the common man.
they're still used to buy drugs, which keeps the value up. Also money laundering. Now, if the gov't cracks down on the laundering plus legalizes drugs...
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There's absolutely no way any cryptocurrency will ever gain a foothold as a currency used for every day transactions if the best it can offer is, as you said, 80% price plunges every two or three years.
That still wouldn't be a problem if transactions were quick, cheap, and you'd have some intermediate store of value.
Say I receive X Bitcoin as payment for a job, and buy X Bitcoin worth of coffee beans for that. Then I sit on that for a year (Bitcoin goes up to 15x what it was when I bought the coffee beans), I sell the coffee beans for 1/15X worth of Bitcoin, and exchange that into whatever 1/15X Bitcoin is worth then. Most likely, somewhere near the price of that stack of coffee beans I started with.
That would be entirely feasible if transaction costs were low, transactions quick, with enough intermediate stores of value to choose from. But from what I've read transactions are slow and/or costly. Meaning the exchange rate may go up or down 10-20% or more while I'm waiting for a transaction to go through. And for small exchanges, transaction costs may be a significant part of the total. Not to mention the limit # of places that will take Bitcoin as payment. That is why it's no use for every day transactions.
It's a bad idea to talk publicly about how much crypto you hold; you become a target.
In the past the crashes were caused by liquidity, confidence and people trying to take their profit. (Or Mt. Gox covering their stupidity) This crash was caused by people having to sell to pay electricity bills. With a normal stock or commodity there are natural sellers. The people who mine silver have to pay the mining cost, when GM sells stock they do it to retool or invest in themselves and they will repeatedly sell more and more. There is also a natural ceiling on the value of GM stock. If the price gets crazy GM will sell more and horde the cash. With crypto currency we had huge market caps but most of the coins were held by a few people who had no need to sell. There was no theoretical max value of the currencies. You couldn't short crypto because you were literally exposed to limitless losses. The only major forced selling before mining went insane was MT Gox and every time they sold the markets would crash.
Keep shaking your fist at the clouds old man.
Nothing of value lost, not even money.
"The likes of Facebook and WhatsApp are free to those whose privacy is of zero value."
Cry me some crypto-tears. Buy more AI stock to take your mind off it.
Table-ized A.I.
That would be true if the USD is the only currency in the world. It isn't.
Don't fight for your country, if your country does not fight for you.
One of the great feedback loops that usually drives a property or stock crash is leverage. If you get underwater on your speculative mortgage, or your margin gets eaten by a stock dip, then you are forced to sell which puts more people into this situation who are forced to sell...
But I have not seen anything suggesting that much of the crypto market is leveraged. This suggests two things. One that this plummet is actually more fundamental. But, that false recoveries are going to distinguish this crash more so than your typical bubble.
This article is sponsored by central banks.
Also, it's not factually correct: Bitcoin has lost 67% of its value (which was primarily pumped by an unnatural spike in interest) and I couldn't care less about altcoins which are colloquially called shitcoins - most of shitcoins serve exactly zero purpose and were created as a means of raising capital and running away with it.
You forget the effect of fractional banking. To make a 100 dollar loan the bank doesnt hae to have 100 dollars, they can hold 15 dollars in reserve and make a 100 dollar loan. So say a bank A started with 60 dollars, they make loans of 400 dollars, the folks who took the loans deposited it in Bank B. Bank B now has 400 dolars of reserves, they can now make 2400 dollars of loans to customers who deposit in Bank A. Bank A now has 2400 dollars in reserves and can make 14400 dollars of loans and so on.
To paraphrase your example with fractional banking everytime I raise an object into the air I can have it fall down 6 times and everytime an object falls down it raises an object into the air so now I have 6 objects in the air.
Banking is literally the process of creating money. The Fed (which is a trade union of private banks) exists to make sure bankers dont go crazy with this process. The other check on the system is people dont take out loans just because a bank can offer loans , they do only because they have a real need (something productive which will create value). So as more value is created in the economy you need more money to represent that value so we do need to constantly create new money.
Now whether you create the new money through fractional banking or through solving crypto puzzles is only a question of efficiency. Doing it the traditional way uses less electricity but you spend money on regulatory mechanisms to make sure noone is cheating (counterfeiting, giving loans beyond reserve ratio etc).
The open question is whether the cost of creating money through solving math puzzles is less than the cost of creating it through the FED.
**Life is too short to be serious**
In the Neolithic Age with handtools a person might spend an entire week creating a stone knife. Now it can be made on a CNC machine in 5 minutes and you can order it on Amazon in 30 secs and lets add in another 5 minutes of work done by your USPS delivery guy to get it into your hand. A flint knife is now worth 15 minutes of time instead of a week. Things are way cheaper. We all live pretty much like kings of a bygone era
**Life is too short to be serious**
This is part of the reason when a guy who wanted to be my housemate said his job was a "full-time crypto trader" I passed him over. I wasn't interested in someone who's primary source of income was a ephemeral fad which would inevitably leave me with a housemate who's not able to pay his share.
Likewise, BitTorrent is cool for downloads not requiring a central server, doing large downloads in pieces, etc - but catches hell for association with copyright infringement
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
A sibling post mentioned Beanie Babies and Magic cards.
The volatility there is in extremely powerful old cards printed in very small quantities (at least tiny amounts compared to the current playerbase)
WotC won't reprint those because of a promise not to after an old wave of reprints crashed prices but this causes its own problems.
The last several years of new cards hasn't been so crazy.
Playing the game isn't exactly intrinsic value but it's more than crypto or Beanie Babies have
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
https://slashdot.org/story/01/...
Only the State obtains its revenue by coercion. - Murray Rothbard
Right, Kaenneth - so why talk at all? Oh, to encourage greater fools, I get it. EG, pretty slimy.
Why guess when you can know? Measure!