This is not like the dotcom crash – though it’s even more brutal.
Cryptos are having another bad-hair day, one in many, with just about all the largest ones crashing 12% to 25% this morning.
It’s crypto mayhem for those who’re watching their wealth evaporate, after having gleefully watched it balloon in multiples of 10 or 100 in a matter of weeks and who expected to be billionaires by year-end. At the time, which was just a few weeks ago, they’d touted whitepapers full of intelligent-sounding gobbledygook as to why these price surges were based on fundamentals, and how these cryptocurrencies would change the world.
By now, there are a gazillion of these cryptos. Anyone can issue new tokens. According to coinmarketcap.com, there are now 1,513 of them out there, about 100 more than last time I pooh-poohed them on January 17. They multiply like rabbits, and as long as there’s anyone out there still silly enough to put real money into them, the issuers of these new tokens are going to get rich. The reason why there are scams is because scams work.
Total market capitalization, according to coinmarketcap.com, is now at $335 billion. This is down by 52%, or by $372 billion, in just one month from the peak on January 4, an era when market cap was headed to $2 trillion by the end of 2018, and when RBC Capital Markets prophesied it would reach $10 trillion over the “longer term.”
Meanwhile, said market cap is evaporating with blistering speed.
Here are the biggest losers in terms of the hated fiat currency, the US dollar, though losses are even larger in other currencies that gained against the dollar recently:
-$211 billion: Bitcoin plunged 15% this morning to $7,277. It has now plunged 64% from its peak of nearly $20,000 on December 17, when it was still going to go to $1 million. At the time, market cap was $333 billion. Now down to $122 billion. Bitcoin speculators have surrendered $211 billion.
-$119 billion: Ripple plunged 16% this morning to $0.71 and 81% from its peak of $3.79 on January 4. Over the same period, market cap went from of $147 billion to less than $28 billion at the moment, with speculators giving up nearly $119 billion.
-$68 billion: Ethereum plunged 18% this morning to $718, and is down nearly 50% from its peak of $1,426 on January 13. Market cap has plunged from $138 billion to $70 billion, with speculators watching collectively how $68 billion have vanished in three weeks.
-$52 billion: Bitcoin cash plunged 19% to $932 this morning and 76% since its peak on December 20 of $4,020. Over these six or so weeks, market cap plunged from $68 billion to less than $16 billion now. $52 billion gone.
-$24 billion: Cardano plunged 17% to $0.32 this morning and 74% from peak of $1.27 on January 3. Over the same period, market cap was whittled down from $33 billion to $8.5 billion. Over $24 billion gone in about a month.
-$13 billion: Litecoin – whose founder admitted on December 20 that he’d wisely cashed out at the peak by selling his entire stake to true believers who are now eating the losses – plunged 15% this morning to $129, and 63% from the peak on December 18. Market cap went from $20 billion to $7 billion, with $13 billion having turned into smoke.
-$13 billion: NEM plunged 17% to $0.46 this morning and 75% from the peak of $1.95 on December 3. Market cap went from $17.6 billion to $4.2 billion. Over $13 billion gone.
-$6 billion: EOS – whose Initial Coin Offering I ridiculed on December 18, at which time the token traded for around $10 – went on to over $18 on January 12, before plunging. Today it’s down 12% to $7.70, and down 56% from its peak. Market cap plunged from $11 billion to $5 billion, giving up $6 billion in three weeks.
Pretty soon, you’re starting to talk about some real money.
$372 billion have evaporated in just a few weeks. Banks are worried about getting exposed to it via the mechanism of credit. Many of the largest banks are now preventing credit card transactions with cryptocurrency exchanges. They’re worried customers borrow on their credit cards to get rich quick, while paying 27% or so in interest, only to watch the crypto wealth disappear, after having made someone else rich quick. Banks are worried about the ensuing defaults on credit card debts.
Regulators too are cracking down around the globe, years behind the curve. And hedge funds that have plowed other people’s money into this scheme and seen returns of 1,000% or more last year, now can’t get their money out without crashing the crypto market further, given the hedge-fund sums involved and the absence of liquidity, and some are going to blow up. But they’re relatively small funds, and they don’t matter.
And the impact on the overall US economy?
It will be tiny, outside of the faintly audible gnashing of teeth among the stiffed ones. The $372 billion that have already evaporated, and future evaporations, are spread around the globe and are concentrated in Asia. So the impact on the economy in the US will be negligible, unlike the dotcom crash in 2000-2002, which was heavily concentrated in the US.
No one is even talking any longer about the concept hyped until a month ago that these tokens were the best “store of value” or the concept hyped a year ago that these tokens are the next world currency. By now it is clear to everyone that they’re just an unregulated form of online gambling, peppered with plenty of scams to add some spice.
But these things will bounce. They always do, on the principle that nothing goes to heck in a straight line. And hundreds more cryptos will be issued over the next few months as long as anyone is still out there buying them, and a plethora of intelligent-sounding gobbledygook whitepapers will accompany them to show why they will change the world.
“Blockchain stocks” are already well on their way. It’s not a pretty sight. Read… “Blockchain” Stocks Collapse by 40% to 90%
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Well no doubt the bitcon believers will be backing up the truck to buy at these discounts. /s
Sorry to say it is probably a disaster for some who bought the pump and dump hype. Painful.
A believer told me that he’s waiting for something like this so that the weak hands will be forced out.
There is a lot of very intelligent reporting on the subject, and while cryptocurrency might not go away some or all of these companies might. The next big thing is GPU, and the companies making the new AI chips are developing processors that will make cryptocurrency work. If Crypto crashes keep an eye on the SOX, there are some better than that probably.
AMD is in a great place for SoC CPU/GPU combos. Intel got caught with their pants down only to obfuscate — pathetic and unexpected to say the least.
Was just a matter of time before China laid down the hammer on cryptos. They’ve given their elite a generous share of time to freely move into various asset classes globally.
Blockchain is here to stay along with third generation coins with real science and math behind them. Cardano is one I hold in high regards, yet all with move with the ocean for now. The fat is being separated from the meat, ditto for securities.
Should be super happy today then as the weak hands are in full flight!
This article is a bit too early, but then, Wolf is consensus-seeking. Notice how what I said would happen, did happen? I said when Dow went to 45 (in real terms), liquidity would be at 100%, which would mean 0%. Well, the Dow did that, and now the “market” has begun to recognize that liquidity has evaporated (the “market” is still in the grieving stage, feeling that liquidity is evaporatING–poor fools).
Next? The Dow crashes to 0 and remains there. Why? Because there is no economy any more–there is simply a collapsing Ponzi. If you put aside your normative assumptions, you will understand what is going on.
And if not? You will starve to death. Welcome to the 21st century!
This is what Marko Kolanovic said in response to today’s plunge:
“We also want to highlight a strong probability of policy makers stepping in to calm the market.”
This will not happen. We are 1929 to the 1929th power. We are up into the multi-quadrillions needed. It is simply impossible. Whatever social policy is going to do after this collapse, it better start doing now, because the Fed will not participate in a coup.
I said it before, and I am right on the money this time, too.
Why do you think Powell is a lawyer? Because he knows the fine legal line between the general welfare and a coup. A coup does not advance the general welfare, although hundreds of millions screaming that they are losing their shirts, would appear to make it so.
There will be no bailout. Period.
Change your minds, or lose your lives.
Hi,
I would love if you elaborate a little more for someone not into this as much as you. Share with me!
bucket shops. there, i said it.
buying cryptos with credit cards, oh my.
This plunge is moving so fast, it’s hard to keep up. Bitcoin is now at $6,980 according to WorldCoinIndex.
I’m going all in on bitcoin at 15 cents. Well, not ALL in.
Try cashing out and running with the profits now .. if you can … all bets are .. you can’t .. because even at todays discount prices nobody is buying . Suffice it to say y’all should of set a reasonable albeit profitable top end margin and bailed when you hit it … cause if you had … even at todays prices you’ve of walked away with a tidy profit rather than staring down the throat of a huge loss
Sigh … no one ever learns .. that which goes up exorbitantly and far too quickly … inevitably comes crashing back down to earth . Making the only way to profit from such high risk volatile investments is to adapt a Hit & Run tactic setting both low and high margins to protect yourself .. and bailing when the high is hit.. rather than allowing greed to rule your decisions … Investments 101
Reminds me of trying to cash in on the obvious, during the “dot.com” deflation. Stocks like Juniper Networks (“Jumper” to traders) and JDS Uniphase were extremely overpriced. Let’s say, “JNPR” was at $240, so you’d look to buy a strike-price $220 put, with a bid-ask at $9.50-$10. If you set a limit purchase price, even at the ask, the bid-ask would magically jump to a price above $20, essentially making it a “loss” before you agreed to buy. Only the Market Makers were allowed to benefit from falling prices. Retail amateurs only allowed in on expiration day, and invariably clobbered.
It’s all about who makes the Market, regardless of the goods.
i’m all in at 16 cents. the whole pile.
It would drop a lit faster if it weren’t so hard to sell because of the for all intents and purposes hard cap on the number of transactions that can be done.
Well, that also causes spooks.
At what point does the Billions that have Evaporated just as they were created, become the Evaporation of a realistic % of some peoples real money would be the next Question would it not?
Along with how much excess liquidity will the coin scam manage to drain from those that have it to waste.
You just made me think of it. Is there leverage in play here? If so the second order effects of these losses haven’t begun to play out yet.
There is starting to be leverage – via credit cards, mortgages, etc. There may also be some leverage at the institutional level (hedge funds borrowing at the institutional level). To my understanding, it is currently not possible to buy cryptos on margin via a broker. But that doesn’t mean that leverage isn’t part of it in some unknown magnitude (I think it’s still small though, thank goodness).
This month still 21 ico’s to go.
https://icodrops.com/category/upcoming-ico/
Not just cryptos. The everything bubble POP?
I strictly look at basic fundamentals. Early in the 08 meltdown, I was convinced we were on the verge of another major financial calamity. It was bad enough, but somewhat dulled and long delayed by central bank liquidity provisions.
One equity that I watch closely is SPAM, or (HRL) Hormel Foods. This is a lower end consumer staple. It’s stock price is somewhat correlated with the economy. When low the economy is good and when high the economy is bad.
Buying in February 2013 at $16.38 selling half the position when the stock started a six week topping pattern in February 2016. Now completely void of all equities. The market looks like its toppling over.
Will wait to reenter HRL at the coming bargain prices. When people are poor and unemployed, they eat SPAM.
The simple ideas so often work out.
Yes.
An old saying – ‘Be right and sit tight’.
“I’m about to repeat what I said at this time last year and the year before… sooner or later a crash is coming and it may be terrific”.
– Roger Babson September 15, 1929.
Looks like there are going to be some bitcoin fans who going to be chowing down on SPAM in the future rather than picking out their new G650.
Maybe it will bounce back up. I see the marketwatch headlines rarely mention bitcoin now.
Buy the dip!/s
Good heaven for a sec I thought their symbol actually WAS SPAM.
Had to check cuz I was in disbelief they would do that.
Haven’t had it since a kid, 60’s, but then my Brit folks would buy Brit bully beef too. This was of Argentine origin.
Few years back I had supper with them, bully beef and boiled spuds.
Perhaps unkindly, I remarked that the meal was missing the rumble of distant artillery.
I recall Spam was sort of ok fried in batter, but now…
I understand it’s still cool in Hawaii.
How about smeared in Marmite? With a side of well- done broccoli ‘a la anglais’ , whipped and consumed with a milkshake straw.
Anything that comes in a can from New Zealand is “peesoupo” in Samoa. The beef peesoupo is made from beef parts too knarly to put in canned dog food….you know, skin with hair, that type of thing.
Samoans eat it!
SPAM is life in Hawaii. We’d cut it into strips and put it in saimin (hawaiian version of ramen), we’d fry it, and there’s spam musubi which you can get in any 7-11, a piece of fried spam “tied” onto a chunk of rice by a band of seaweed. Where I am, there are a lot of people from Hawaii and I just learned that a local cafe serves spam’n’egg breakfasts.
Hawaii’s also big on pilot crackers, I think it’s also (or was also) known as “ship’s biscuit”. There’s pipi kaula which is Hawaiian beef jerky, bread pudding is really common but it tends to be really firm. There’s a Hawaiian version of hot dogs, they’re dyed red – I believe that may be what’s called saveloys in England. Portuguese, or as we’d say it, “Po’da’gee” sausage, AKA linguica I think, is popular too. And then there’s the famous Hawaiian sweet bread, again a Portuguese thing.
It’s too bad so many of Hawaii’s quirky food preferences go from the 1800’s back to antiquity, because I’ve had S.O.S. done right once, and that stuff is seriously good. I think that’s more a WWI-WWII thing and doesn’t come in a neat little can. (Although I remember the little jars of salted “chipped” beef being for sale in our little country store in Punaluu though so someone must have been buying it and making S.O.S. at home.)
What’s in your wallet?
A few bucks (fiat, U.S.).
So far as I know (haven’t been all that bothered about it for forty years now), my farmland would be priced at about what it was yesterday – last week – last month …
CRAPtocurrency
I saw $6914. Screaming deal !
Dow down -506 pts.
All in a days work.
My bad $6857. and tumbling.
I don’t hear much from the seasoned cryptonites : They must be very busy cost averaging .
They’re keeping their focus, on 2021! This is all noise!!
The latest “mental shield” is counting the number of times a certain crypto has fallen off a cliff, value-wise ( e.g. “nine similar selloffs in prior years).
That’s supposed to calm everybody.
Get the band out on the deck, and tell them to start playing!! (1912, Titanic).
Lloyd’s is barring credit card customers from buying cryptos with thier cards.
http://www.telegraph.co.uk/technology/2018/02/04/lloyds-bank-bitcoin-crackdown-credit-card-owners-banned-buying/
So is Virgin Money.
Wait. People actually buy cryptos using credit cards?
Pity the ones that took out mortgages for crypto .At this point looks like a tough move ,Maybe not; but i think so.
Seems a bit hypocritical to me. All these banks are getting free money and gambling away knowing they are fully insured by us tax payers. Meanwhile Joe Bloggs on the street also wanting to gamble on cheapish credit but who has no back up cannot. They don’t seem to have banned credit to purchase stocks and shares though so let’s start plunging it into that sure fire dead cert. When they loses 50% of its value what will they do.
Andy S
Nice rant, but (other than getting cash from a credit card cash advance that you walk over to deposit with your broker), you cannot buy stocks on a credit card.
It’s been this way for a long time. Not the least bit hypocritical.
well, you can always take the rent and the grocery budget (cash you can hand to a broker) and buy stocks or even bitcoin, and then turn around and pay the rent and buy groceries with a credit card. and save on the cash advance rates!
p coyle
Congratulations. You’ve demonstrated cash is fungible.
So how do you (quickly) buy cryptos with a pile of $100 bills?
Where’s the crypto-plunge protection team when we need ’em? Or, is the crypto space _Market_ driven!? I’m looking for a de-coupling of cryptos from the dow jones as I was looking for a de-coupling of gold from said dow in 2007. It happened indeed, but not before gold crashed and I lost my highly leveraged shirt on what was a pretty good bet. No leverage this time and I’ll ride it out. Can central banks revive this moribund economy when it crashes again. QE5 will have to be substantially more than the paltry 50B/mo of yesteryear, annual deficits exceeding 2T Game over. Have fun with your fiat confetti.
Bouncing back?
I prefer Tulips myself, get in quick and you will make a FORTUNE!
At least with tulips, you can grow, multiply, and divide ….
And there’s the enjoyment of their beauty and fragrance–two intangible assets.
Looks like the Dow is following bitcoin down today.
The Dow and in fact all of Wall Street started taking a major nose dive last Thursday … with Friday being worse .. and today .. the worst of all . Makes one wonder beyond the obvious what is going on beneath the surface ? Reality finally coming into focus perhaps ?
Yes, and we’ll all mock the stock holders as they lose their money in the rigged casino. Or is that level of
petulance reserved for bitcoin?
I’m pulling for a strong, anonymous, crypto. Its like online cash. Makes me curious as to what motivates the geriatric, anti-crypto, echo chamber in here.
Well, take a look at Puerto Rico over the past few months and tell me, what do you do with your crypto currency when the lights go out? Or what if our government, or another government, or a bunch of terrorists crash the internet? You have to have an unshakeable continuity bias to believe that all the electronic amenities we enjoy right now in the advanced areas of the globe will always be there all the time.
Or something as inevitable as large solar flares crashing our electrical grid (see Carrington Event).
Wait, isn’t “anonymous” and “online” an oxymoron?
Sounds like you got a little frazzled losing too much fiat on your cryptos.
well live the crypto dream in PUERTO RICO . The early currency disrupting entrepreneurs are taking their nest eggs to hatch on the battered island to form a new society. No problem, just need a few billion to rebuild
the neglected infrastructure.
http://bitcoinist.com/crypto-billionaires-are-building-a-utopia-in-puerto-rico/
dogstar
Markets (including stocks) have been going up & down for centuries. Essentially, the value wins out.
Inexperienced investors might be terrified by this. It’s just the market doing what it should do periodically: flush out the bad/failed.
Conflating cryptos and American stock exchanges is simply silly, but inexperienced and/or foolish investors can also lose their shirts in stocks. “A fool and his money are soon parted” was coined (so to speak) to apply to foolish investors, not just the stock market.
Most of us see crypto coins as an encrypted computer file that is a distributed block chain that could act as a ledger of transactions for attached to an asset. Maybe like a car part, a movie, etc. From Wiki
“A blockchain – originally block chain – is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block contains typically a hash pointer as a link to a previous block, a timestamp and transaction data.”
Some guy named Satoshi said it is a crypto currency. I don’t know who he is so I don’t believe him. Actually nobody knows who he is. That is a red flag in my book.
For all of the guffawing about the crash in cryptocurrencies, I wonder if the crash in bitcoin price is less about foolishness and more like the Canary in the coal mine for the greater American and world economy. A whole lot of institutional investors were trying to rush into the cryptocurrency space last fall, and a lot of that probably had to with the fact that equities and real estate was already highly overvalued and due for a major price correction, and with the greed still in their system, they were looking for anything to make an even bigger buck than they already have.
everyone exits the theater once somebody yells fire. who sat closest to the doors?
At least with a Beanie Baby you have a souvenir of your stupidity. With ButtCoin a lot of people are taking it in the “proverbial” a*s…
Credit cards have not banned anything, it is called take a cash advance and purchase whatever you want .I only get 3 offers every month telling me to get a cash advance for 1 year at 3 % , better than charging on the card and paying 18 or 19 % .
Gold is the only thing floating on the sea of red today.
After hearing Cryotocurrencies touted as the wave of the future at an office meeting about 6 weeks ago I knew the end was near…I work for a Real Estate brokerage and cryptos were going to make our transactions much smoother…as well as replacing most fiat currencies.
Relitters are gamblers and irrational optimists or they wouldn’t stay in the game ( It is fun), but anytime a fad catches on with this herd it’s about done.
I did have a co worker ask me what I thought of Crypto’s after the pep talk and I reminded him that they are backed by the full faith and credit of “Oh, well..nevermind”.
“O well never mind” A great and logical come back.But did it do any good?
i have been interested in the crypto’s for, say 5-6 years now. a couple of months ago, i had a trusted friend who happens to be a developer bring up bitcoin in a conversation. i had to honestly tell him that i don’t know what to think of it. i like the idea. i just don’t trust it yet. i suggested putting $100 in and throwing three darts at the ever expanding cryptosphere, buying some, and putting the remainder into bitcoin. it was meant to be a learning experience for the both of us.
soon thereafter, a coworker said her teenager was talking about bitcoin and she wanted to know what it was. another coworker shortly thereafter said his brother was going all in on bitcoin, what did i think.
those were my “shoeshine boy” moments. never took the $100 dartboard challenge, and am roughly $60 better off for it.
Yes when my quintessential W-2 slave buddy who reads only major news outlets started asking me about Scamcoin in December I knew the game was up.
Not a fan of the likes of Jim Cramer but I think it was him that always said that when the normies started to ask about financial matters a top/bottom was most assuredly in.
People who were long the various equity markets worldwide should have been more or less out by last Thursday if they had any sort of systematic stop protocols running. How does one protect a ScamCoin position in an analogous manner?
But even more pertinent – how does one protect against governments X, Y, Z, A, B, C etc leveraging the banking/tech industry (which they control) into more or less making the libertarian paradise of ScamCoin disappear?
In my ignorance, it seems to me that Bitcoin was being touted as a currency and as a means of investment simultaneously. If was sold as fish or fowl, but not as both, certainly we would not have witnessed it’s very rapid appreciation recently and it’s astonishing value collapse in recent days.
Who bought the bitcoin bounce last week, for example?
I hope everybody has taken my good advice and has planted potatoes, because you’re going to need them, but I expect most people did not and will simply continue to take everything much too much for granted.
I am frequently concerned that my comments may fail to convey the proper sense of urgency. Wishful thinking and self-deception are unhelpful as survival tactics. There will be plenty of opportunity for panic later on.
I’ve got garlic ,carrots, romaine lettuce and beets growing as I type Working on a chicken coup and enclosure I’m hoping I won’t NEED them but I’m enjoying it all the same
I am afraid that many investors, stock market, cryptos, you name it, are true believers. Investors should be detached and analytical, working from the premise that they could lose money as well as gain.
Anyone investing as a true believer is on shaky ground. As Wolf often says, things rarely go to heck in a straight line.
Banks have no exposure to cryptos through customer credit, like credit cards?
IT WILL ONLY GET WORSE ALL THROUGH 2018 AND BEYOND !!!!
BOOK OF REVELATIONS !!!!****
I’m 67 and I’ve been invested in my two main mutual funds (no-load, low mgt. fee) since the mid ’80s. I’m currently 77% in equities. I’m a buy-and-hold investor, and I’ve done well. In fact, I’ve never sold and I’ve never rebalanced. If I did not already have such a high percentage in equities, I would use this as a buying opportunity, but I would wait until there’s more of a shake out in the market. As the saying goes, “Never try to catch a falling knife.” This does not portend the end of capitalism, which will disappoint some of the posters. Even if interest rates go up a hundred basis points, the rates are still accommodative.
The irony of the neighbouring articles.
DOW crashes lots, but still up on the year. Oh noes says Wolf.
BTC crashes, but still up on the last 6 months. 5000% up on the last 3 years. Oh noes says me.
Only idiots got burned. What a story!
fiat currency still flowing into bitcoin:
http://fiatleak.com/