Cryptocurrency price plunge worse than bursting of dotcom bubble
Cryptocurrency prices that reached dizzying heights in late 2017 and into 2018 have plunged back to earth this year, bolstering the arguments of skeptics that the scorching hot market for digital money was an economic bubble due to burst.
According to Bloomberg News, the MVIS CryptoCompare Digital Assets 10 Index has fallen 80 percent from its January high -- worse than the Nasdaq Composite index's 78 percent peak-to-trough plunge following the dotcom-stock bust in 2000.
Bitcoin, the most widely used cryptocurrency, started the year priced above $17,000. It recently changed hands on $6,261, a drop of more than 60 percent, according to CoinDesk. Rival cryptocurrency ethereum recently traded at $173.25, down nearly 90 percent from its January high of $1,414.90. The total value of the top 100 cryptocurrencies tracked by CoinMarketCap, once nearly a trillion dollars, was pegged most recently at $188.5 billion, near its all-time low of $187 billion.
To be sure, fans of cryptocurrency have claimed that, much like the early Internet, digital money is an idea that will catch on eventually. They also note that prices have rebounded from steep sell-offs in the past. Indeed, there likely are bitcoin holders still in the black from the 1,500 percent price increase they experienced in 2017.
Bitcoin, which was first proposed by a person or persons who used the pseudonym Satoshi Nakamoto in 2009, has gained popularity among some investors as an alternative to conventional, or "fiat," currency. The digital version is "mined" electronically by solving complicated mathematical equations. Converting cryptocurrency into "real" money can be tricky since it isn't widely accepted.
Some of the leading figures in the investing world, including Warren Buffett, who likened bitcoin to "rat poison," and JPMorgan Chase CEO Jamie Dimon, have urged investors to avoid the cryptocurrency market. The view, however, isn't unanimous on Wall Street.
In a recent interview with CNBC, Mohamed El-Erian of Allianz Capital noted that the underlying blockchain technology behind cryptocurrencies, has some long-term potential and that bitcoin itself could be a buy if it falls below $5,000.