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Crypto’s crash just surpassed dotcom levels as losses reach 80%

Selloff is now deeper than the early 2000s rout in tech stocks.

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% 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.

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.

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.

Wednesday’s losses were led by Ether, the second-largest virtual currency. It fell 5.2% to $172.41 at 6:21 am in New York, extending this month’s retreat to 39%. Bitcoin was little changed, while the MVIS CryptoCompare Digital Assets index fell 2.9%. The value of all virtual currencies tracked by sank to $187 billion, a 10-month low.

One silver lining of the crypto slump is that ramifications for the global economy are likely to be minimal. While the market has lost more than $640 billion of value since peaking in January, that’s a far cry from the trillions erased from Nasdaq Composite stocks during the dot-com bust.

The crypto industry’s links with the traditional financial system also remain weak. That’s been a disappointment for bulls, but it’s good news for everyone else at a time when digital assets are tumbling.

© 2018 Bloomberg L.P

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When will Bloomberg do proper research though? They keep churning out uncontextualized ‘tip of the iceberg’ perspectives with little substance.

This crash is not even close to the largest crash in Bitcoin i.e. this volatility is nothing new (its quite normal given the rises)

8 June 2011: -94% (631 days to recover)
14 Sep 2010: -93% (40 days to recover)
30 Nov 2013: -85% (1181 days to recover)
10 Apr 2013: -76% (211 days to recover)
6 Nov 2010: -72% (86 days to recover)
Current crash: -70%
10 Feb 2011: -49% (66 days to recover)
13 May 2011: -34% (12 days to recover)

Perhaps its worth considering some of the fundamental news:

1) Canada regulators approve regulated Bitcoin fund i.e. Canadian accredited investors can buy in their retirement funds

2) CBOE (largest US options exchange) partnered with VanEck, have a bitcoin ETF application lodged at the SEC

3) CME (largest exchange owner by revenue in the world) already listed regulated Bitcoin futures and have announced Ethereum futures trading

4) Citi Group (13th largest global bank) creates non-custodial, regulated cryptocurrency product for clients

5) Nomura and Goldman Sachs both opening custody for cryptocurrency exchanges (in addition to both companies already offering access to clients to trade).

6) ICE (holding company of NYSE [world’s largest exchange] and ten other of the world largest exchanges) is launching a physical Bitcoin and cryptocurrency exchange through their start-up called Bakkt. They have partnered with Microsft and Starbucks to “offer a federally regulated market for Bitcoin. With the creation of Bakkt, ICE aims to transform Bitcoin into a trusted global currency with broad usage.”

7) Winklevoss twins just announced a stablecoin backed by USD. The Ethereum-based token is: Approved by NY Department of Financial Services, Dollars held in FDIC-insured State Street account, Audited by multiple third-parties at various times

Last year some were telling Pick n Pay accepts Bitcoin; no said PnP.
Then people said we would have Bitcoin ATMs.
Then ATM funds and fund of funds. did not happen.
SEC stopped and few funds in fact and a few exchanges no longer allow Bitcoin.
Then we have regulators in Japan; South Korea and China looking at it and basically, we were told we could buy anything with Crypto’s = err Not Happening.
Cryptos fall in price as they have little investment value at present.
But there are always profits who pull out another “official” regulator or Bank spokesperson who say that cryptos are going great and will change the world. Not Bitcoin was SUPPOSED to make regulator not necessary but now the profits hang on every word they say. – The irony escapes them.
By the way: getting into Crypto’s to draw cash at an ATM is like inventing the wheel and then walking barefoot next to the wagon. Rather backwards than forwards I think as today there are already less ATMS in the developed world than a year or two ago as card and mobile transaction make cash redundant.

Conceptually, the Bitcoin phenomenon resembles the Couturier of the Emperor’s New Cloths from the Hans Christian Andersen fable launching an IPO in the 1630’s Amsterdam Tulip Market.

What on earth? I presume the word you are looking for is: prophets.

I see the Crypto ATM as a scam to scam scammers. The main business case is not withdrawal for daily spend, but rather deposits. Essentially charge high fees to people who have large quantities of cash wanting to convert directly to crypto….. for some reason.

For crypto to have an actual value it needs to be able to function as a currency. It can never be a reliable means of exchange or store of value with the extreme volatility you highlight. Those are two of the key requirements for something to be a currency. Imagine for instance that you local butcher decides to accept bitcoin. You buy half a lamb for one bitcoin today. The butcher paid one bitcoin for a whole lamb. Tomorrow however the market believes bitcoin is worth 20% less. The butcher know needs to pay 1.2 bitcoins for a lamb. He has just lost nearly half of the margin he made on selling you the lamb. Even rands are preferable to that

The music stopped. Time to find a seat.

This particular dance i decided to rather be a member of the popcorn gallery.

Still, this is the small correction that doesnt really matter. Just speculators who caught themselves with their pants down.

Now we wait for the big one, the global credit crunch in a part of the world system that matters and will domino to affect everyone.

A correction larger than the dotcom bubble can hardly be described as small. This is termed correction only in the most technical (and useless) sense, invested people are trying to re frame it as such stating there have been ‘other corrections’ prior to 2013. This is like comparing the ups and downs of a tech start up with an outrageous idea to something like Apple crashing. The dotcom crash was a ‘correction’ between the market overconfidence and what the market could really produce. So the only real question becomes “What can Bitcoin internally produce?”.

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