Tuesday, November 2018
Now Reading:
Bitcoin and cryptocurrency plunge 80% in value
Full Article 4 minutes read

Bitcoin and cryptocurrency plunge 80% in value

Cryptocurrencies were once seen as a hot commodity in financial trading but it seems the bubble has now burst, according to industry analysts.

The value of Bitcoin and other forms of digital currency has plunged by 80 per cent since January – a total loss of $640 billion that has sparked comparisons with the Dot-Com bubble in the early days of the internet.

From 1997 to 2001, a large number of online-based companies – commonly referred to as Dot-Coms – were founded, prompting a flurry of investment.

However, the value of many of these companies started to plummet around the turn of the new millennium.

Some, like eBay and Amazon.com, were able to recover and surpass their stock price peaks during the bubble, but hundreds more were not as fortunate.

The steady decline in cryptocurrencies has been triggered by the wariness of institutional investors, banks and regulators.

An increasing number of startups that raised money through an ICO (Initial Coin Offering) are now selling their coins for money backed by governments, creating pressure to sell.

The latest valuation comes from the MVIS CryptoCompare Digital Assets 10 Index, based in Frankfurt, which has tracked the collapse of digital currencies from an all-time high in January to a recent 80 per cent drop in value.

The decline of these digital coins is now steeper than the Nasdaq Composite Index’s 78 per cent peak-to-trough monitoring after the Dot-Com bubble burst in 2000.

‘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.

The losses were led by Ether, the second-largest virtual currency after Bitcoin.

Its value fell by six per cent to $171.15 (£131.10) at 7:50 am ET (12:50 pm BST) in New York yesterday, taking its total drop in value this month to 40 per cent.

Bitcoin remained relatively stable, while the MVIS CryptoCompare index fell 3.8 percent, Bloomberg reports.

The value of all virtual currencies tracked by CoinMarketCap.com sank to $187 billion (£143bn), a 10-month low according to the financial website.

The bubble burst comes after warnings by a number of financial experts who saw the impending crash coming.

Bank of England governor Mark Carney launched a scathing attack on cryptocurrencies in Marhc, saying ‘fools’ were pumping up their values.

He warned that the ‘currencies’ showed the ‘classic hallmarks of bubbles’ as he called for them held to the ‘same standards as the rest of the financial system’.

Warren Buffett, one of the most influential and successful businessmen of his generation, has regularly warned about an imminent cryptocurrency bubble burst.

Back in May, Buffett revealed to CNBC that bitcoin was ‘probably rat poison squared.’

The main issue Buffett has with Bitcoin is the fact that it has no intrinsic value.

‘If you buy something like bitcoin or some cryptocurrency, you don’t have anything that is producing anything,’ Buffett said in an interview with Yahoo Finance.

‘You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more.

‘You aren’t investing when you do that, you’re speculating.’

Bitcoin saw its value go through the roof last year – beating the 17th Century dutch Tulip Mania, the South Sea bubble and the Dot-Com bubble of the early 2000s to become the biggest economic bubble in history.

At the height of the worldwide crypto-mania, it was worth in excess of $830 billion (£620 billion).

Investors have already been hit by the vagaries of the cryptocurrency market.

Sydney based journalist Derek Rose said he had been making half a million dollars every other day thanks to Bitcoin and other digital montey, until he lost $7million (£5million) when their value dipped before Christmas.

Suicide prevention messages were being shared among investors as the crytocurrencies plunged in value.

The Sydney-based journalist admits the adrenaline rush of watching his portfolio rise rather than investing in real estate was what kept him investing.

Input your search keywords and press Enter.