It’s falling apart for Bitcoin.
Depending on what exchange you’re looking at, Bitcoin prices fell as low as $12,160-ish overnight, a near 40% drop from the highs hit last weekend ahead of the CME futures launch:
The declines come at the end of a week that saw bitcoin cash surge after Coinbase announced support for BCH, a move that looks to have been frontrun by at least some market participants. But bitcoin cash has now plunged from its highs as well:
Ethereum and litecoin are likewise getting crushed (looks like Charlie Lee sold at just the right time – imagine that):
As usual, it’s impossible to pin down one catalyst but this comes during a week when the media has been awash with stories of increasingly absurd rallies in the stocks of companies that have abruptly switched gears to become blockchain adopters. In one particularly ridiculous example, a company called “Long Island Iced Tea” changed its name to “Long Blockchain” and immediately soared some 400%.
The sheer scope of the insanity prompted a FINRA warning. “It is important to do your research. Even when legitimate companies enter a hot, new sector, con artists almost always follow suit,” Gerri Walsh, FINRA’s senior vice president for investor education, said Thursday in statement.
Market sentiment was also dented by the Youbit debacle, which again underscored the cryptosphere’s inherent risks.
“A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes,” Charles Hayter, founder and chief executive of industry website Cryptocompare in London told Reuters Friday, adding that “with the end of the year in sight a lot of investors will be taking profits and saying thank you very much and closing their books for the holiday period.”
“The sharks are beginning to circle here, and the futures markets may give them a venue to strike,” Ross Norman, CEO of London-based bullion dealer Sharps Pixley Ltd., told Bloomberg. “Bitcoin’s been heavily driven by retail investors, but there’ll be some aggressive funds looking for the right opportunity to hammer this thing lower.”
Echoing those remarks is Oanda’s Stephen Innes who said this: “Most of it is unsophisticated retail traders getting burned badly.” Indeed, Stephen.
In fact, this is shaping up to be Bitcoin’s worst week since 2013:
Meanwhile, futures are now trading at a premium to spot again, after trading a discount on Thursday:
So is this the end? Have we seen “peak crypto”?
Not likely. But you never know. And wouldn’t it be hilarious if the bubble burst before Goldman’s planned trading desk even gets off the ground?
This was overdue and given the trajectory of the last month seems pretty ‘normal’. Retail investors are getting burned? Normal. People new to the space losing their money? Ditto. Sorry HB, but this is hardly the beginning of the end. Much more likely, this is the end of the beginning. Bigger players and more regulation will shape this next phase but its still early and the fundamentals are still overwhelmingly in favor of mass adoption. For those who have been in the space more than a month this is just another #BTFD moment. Look at the order books across multiple exchanges. The buy walls are already up. Haters still wanna hate but players gonna play.