Bitcoin is Down 66%, Cryptocurrencies Dropping in Popularity
(CNN Money) -- The bubble may have burst for bitcoin and other cryptocurrencies.
The price of one bitcoin is now hovering around $6,400. That's a more than 50% drop in 2018 and a 66% plunge from the all-time high of just under $20,000 that bitcoin hit in late December.
Other cryptocurrencies, such as Ethereum, XRP (aka Ripple) and Litecoin, have suffered similar gut-wrenching drops in the past few months.
Legendary investors Warren Buffett and Charlie Munger of Berkshire Hathaway have warned investors to stay away from cryptocurrencies as a result.
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Buffett told CNBC in early May bitcoin was "probably rat poison squared" while Munger said at at the Berkshire shareholder meeting that the thought of owning cryptocurrencies was "just dementia."
Bitcoin may eventually bounce back. Blockchain technology could still transform how people pay for things in the future.
But the scores of other cryptocurrencies that have cropped up in bitcoin's wake may not thrive -- or even survive.
"The market did go up a little too much last year and people felt it was easy to make money. Investors weren't separating the good from the bad," said Ben Marks, CEO and founder of Blocktrade Capital, a firm that trades cryptocurrencies. "But bitcoin is definitely here to stay."
Cryptocurrencies' rise had all the signs of a bubble. Tons of publicly traded companies tried to latch onto the crypto craze.
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Bioptix, a maker of hormones for farm animals changed its name to Riot Blockchain. The stock surged -- until the company disclosed the Securities and Exchange Commission was probing it.
Beverage company Long Island Iced Tea morphed into Long Blockchain. It's since been delisted by the Nasdaq and now trades as a so-called bulletin board stock at a price below 50 cents a share.
Making matters worse: Some companies began selling digital tokens to raise money.
Eastman Kodak -- yes, the camera and film company -- created its own KodakCoin. There's even a PotCoin for the legal marijuana and cannabis industry.
Some of these so-called initial coin offerings are legitimate. But there have been plenty of scams too. The SEC created a fake ICO called HoweyCoins to show how easy it is for investors to get duped.
The sheer number of crypto offerings is very similar to how Pets.com, Webvan, Garden.com and tons of other e-commerce stocks ultimately went under when the dot-com bubble burst in 2000.
We didn't need hundreds of internet retailers. Even Amazon's shares were hit hard in the immediate wake of the tech bust because of concerns about its lack of profit and insane valuation.
But Amazon eventually started to make money as it expanded into more areas and got people to begin paying subscriptions for Prime memberships.
As Amazon became increasingly dominant, other big retailers like Walmart, Best Buy and Kroger adapted their business models so they too could get a piece of the digital pie.
That's been great for consumers -- and the shareholders of large brick and mortar retailers. But it shows that having an e-commerce strategy isn't special. Its a vital part of any retailer's strategy.
The same may ultimately be said for bitcoin and the blockchain.
Blocktrade Capital's Marks said that mainstream companies in the health care and entertainment industries could use blockchain digital ledgers to modernize their record keeping.
Big banks are taking notice too. Goldman Sachs has said it will begin futures trading in bitcoin contracts, a move that should ultimately be good for bitcoin and other leading cryptocurrencies that rely on blockchain.
"Volatility may decrease, which isn't great for traders and speculators, but the involvement of Goldman Sachs and other big Wall Street firms is good for the long-term. It's a seal of approval," Marks said.
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