The latest crash in the price of bitcoin and other cryptocurrencies may be remembered as the moment that crypto-mania fever broke, according to several market followers.
The price of Bitcoin fell as low as $33,000 Monday, wiping more than half the value from its peak around $69,000 in November 2021. The overall value of cryptocurrencies is down to $1.52 trillion and falling from more than $3 trillion in early November, according to Web site CoinMarketCap.
Cryptocurrencies were sent into a tailspin by the Federal Reserve’s decision to signal up-coming interest rate hikes in December. Strategists say the speed and scale of the losses, which have wiped out more than $1 trillion in notional wealth in a matter of weeks, echo the pop of the Dot-com bubble in 2000.
For many who have witnessed previous financial bubbles popping, the signs appear to be there. Violent rallies are giving way to even more violent selloffs. Fear of missing out has suddenly given way to fear of being exposed. Talk of a new era — in this case, advocates dubbed cryptocurrencies and related technologies “Web3” — are suddenly ringing hollow.
Even the recovery in cryptocurrency prices from a previous crash in mid-2021 is consistent with the end of a speculative era. Often, such speculation ends more like a heavyweight prize fight. The asset may be knocked down several times, and return to its feet, before the decisive knockout. In mid-2000, for example, the Nasdaq Composite battled back from bear-market territory only to slide further into it later in the year.
Here is what seven experts have said about the crypto market's recent plunge:
What the Experts say
President and co-founder of cryptocurrency firm Gemini on Twitter:
"Stay calm and HODL...If you didn't invest in Bitcoin because you 'missed it' at $35k, you've just been given another bite at the apple. Don't make the same mistake twice."
(HODL is slang for "hold on for dear life.)
Partner venture-capital firm Placeholder, co-author of the book Cryptoassets: The innovative investors’ guide to Bitcoin and Beyond on Twitter:
“Descending into a bear is like releasing a bouncy ball down a set of stairs. With each bounce, the crowd gasps expecting it to go higher, but gravity only goes in one direction (for a while).”
Lorenzo Di Mattia
Manager of hedge fund Sibilla Global Fund in an interview:
“I think this is the ultimate bear market there. Even putting aside government intervention, the supply of new crypto is massive. There are currently about 17,000 of them. The ‘limited supply’ story on bitcoin is clearly an illusion. Even if with a different name, an unlimited number of coins with similar or even better features can be created.”
Senior market analyst at foreign-exchange brokerage OANDA Group in a note to clients:
“Bitcoin has quickly gone from a consolidation pattern to the house of pain. Crypto traders [are] de-risk[ing] portfolios following the bloodbath in stocks and in advance of next week's FOMC policy meeting. “
Technical analyst in an email:
"A 50% loss means you need a 100% gain just to break even. As far as a new buy, we do have oversold conditions and Bitcoin does look pretty washed out. It is approaching its 100-week moving average at $31,600 and what could be very good chart support just below the 30,000 level. I would only nibble around these potential support areas."
Cryptocurrency investor and consultant in an interview:
"To me, it feels like a bear market. In the stock market. there’s less of a game of [extreme] sentiment. Stocks are pretty well known to the world, Bitcoin and cryptocurrencies are not. In my opinion, bitcoin will go somewhere to around $25,000, if I’m being optimistic. Worst-case scenario, $5,000 or $10,000.
"As for Ether, I'm looking to Ether going to $1,800, if I’m being optimistic. Or it could go to $800 or $1,000 worst-case scenario."
Cryptocurrency investor and Twitter personality on Twitter:
“The Fed made us rich for a while, now they are making us poor again.”