According to the news report by Bloomberg, the world’s largest cryptocurrency fell to its lowest level on Friday since November 2017. Last year, Bitcoin and the cryptocurrency market as a whole saw a stratospheric rise which many observers have called the largest speculative mania in history. However, now, those observers are also saying that the crypto market’s plunge in 2018 could also mean that it was the biggest bubble that has finally burst.
Friday made it the fourth continuous day of declines for Bitcoin, taking the cryptocurrency down by 70% from its all-time high of $20,000 in December 2017. Analysts are now saying that the similarities between the dot-com bubble and Bitcoin’s current situation are hauntingly similar.
The Nasdaq Composite index saw a drop of 78% as the dot-com bubble burst. Now, analysts say that Bitcoin and the cryptocurrency industry are showing almost exactly the same signs.
Just as public offerings such as Pets.com and hundreds like it flamed out in the early 2000s, hundreds of tokens have also gone down to zero in the last few days. Small-cap cryptocurrencies have been hard hit in the last few days. According to Dead Coins, about 800 coins’ value have dropped down to zero, meaning they are no longer worth anything. Coinopsy says it’s even higher than that. According to their tally, more than 1,000 cryptocurrencies have lost all their value in the last few days.
According to the analysis done by the ICO advisory company, Satis Group, less than 4% of the cryptocurrencies that had market caps between $50 million and $100 million have been successful or even showed promise. And now, a lot of them have died out completely.
While Bitcoin may not go down to zero, Nobel Laureate economist who predicted the demise of the dot-coms, Robert Shiller says that the cryptocurrency is still very much a bubble. He said that 2017’s meteoric rise of Bitcoin was not a “rational response” and that the bubble will finally burst.
Bitcoin has bounced back from even greater losses. In past years, the value of Bitcoin has dropped by up to 80% and the cryptocurrency has still managed to make not just a comeback, but also surpass its old values completely. Proponents of the digital asset have pointed to the Nasdaq’s eventual recovery after the dot-com crash. They also talk about the fact that institutional investors buying into the cryptocurrency market also represent a massive pool that could help with the recovery of the market.
However, this time, the challenge is that people are much more aware about the cryptocurrency market and many have already made up their minds about not wanting to invest is such a volatile market. Added to that is the so-called potential investors (read: institutional investors) are actually staying away from the cryptocurrency market due to regulatory as well as massive security concerns.
According to the CEO of Blockchain Ltd., Peter Smith, the conditions of the markets will need to reverse before the big money managers come in to invest in the cryptocurrency market.
On Friday, the price of Bitcoin went down to $5,791 per token, which was a 4.2% drop from the previous day. This is the lowest the crypto has fallen since its price starting rising in November 2017. With this price, the cryptocurrency has fallen about 60% since the beginning of 2018, and has fallen 14% in the second quarter alone.
The capitalization of the cryptocurrency market, which at its height was at $830 billion, dropped to $236 billion on Friday. All of the top ten cryptocurrencies were down on Friday.