Crypto-Mania Collapse Update: $638 Billion Gone

Of the seven biggest, six have plunged by 78% to 92%.

Cryptocurrencies and tokens are multiplying like rabbits: There are now 1,926 listed on, 500 more than early 2018. And even as the number of cryptos continues to swell, each crypto constantly creates new units through “mining.” This dilution and hyperinflation is worse than with all but the worst fiat currencies, such as the Venezuelan bolivar.

Cryptos are “decentralized.” That was one of the major selling points in whitepapers full of intelligent-sounding gobbledygook and other propaganda promoted in myriad ways, including by an army of crypto trolls and celebrities paid by the tweet. Because cryptos are decentralized, everyone can create their own, and all kinds of outfits are mining new units of existing cryptos. It’s really just a big joke. But people are losing large amounts usually expressed in their hated fiat currency. The pain is real. And the numbers are big.

At the peak on January 7, total market cap was $704 billion, per CoinMarketCap at the time.

But new cryptos arrive all the time, and cryptos are also multiplying themselves via the mining process. CoinMarketCap figures the market cap going backwards, based on today’s existing cryptos to arrive at a theoretical market cap at a date in the past, as if all those new cryptos and tokens had already existed on that day in the past. And by this measure, the theoretical market cap for January 7 was $830 billion.

Based on this measure, the aggregate market cap has plunged 77%, from $830 billion to $192 billion in eight months. $638 billion vanished or transferred to those who sold in time from those who didn’t.

The good thing for the US economy is that much of this market cap destruction has hit people around the globe, and people in the US got whacked by only a portion of it.

On December 11, I asked: “Peak Bitcoin Media-Mania Yet? In Ten Practically Funny Pictures, because the MSM was fanning with all its might the bitcoin mania. Looking back, my screenshots of front pages are amusing. Those were heady times! But I missed my target. I was six days early. The bitcoin peak wasn’t until December 17.

Of the top seven cryptos by today’s market cap, six have collapsed by between 78% and 92% from their respective peaks. Several of them are where they were a year ago or 15 months ago. Of the top seven, only Bitcoin plunged less than 78%.

Bitcoin is down 68% from its peak, and is back where it was on October 31, 2017 (all charts via, red and blue marks mine):

Ethereum collapsed 86% from its peak and is back where it was over 15 months ago, on May 29, 2017:

Ripple XRP has collapsed by 92% from its peak on January 4, 2018, and is back where it had been over 15 months ago. That 1,1140% spike didn’t last long. It boggles my mind why not everyone sold during and after that spike. And why did anyone buy? What were they thinking? That this would continue? Note how nearly impossible it is now to unload a major position because volume (grey columns in the chart) has died down, and trying to dump a load is going to cause the price to collapse further.

Bitcoin Cash was going to be the new thingy. It was split off from Bitcoin in August 2017. Over the two days from November 11 to 12, it quadrupled, a phenomenon I observed with a lot of headshaking, to $2,448. By December 20, it shot to $4,300. Now it has collapsed 89% from the peak to $469, below the price where it had started out ($556).

EOS is another late-comer. It kicked off in July 2017 with what became the biggest ICO at the time. It did a beautiful double spike peaking at $21.45 on April 28. In the four months since then, it has collapsed 78% and is back where it had been on December 7:

Stellar shot up in six weeks from about 3 cents to 86 cents by January 3, 2018, and has since collapsed 78% to 19 cents:

Litecoin peaked on December 18, 2017, at $353 and has now plunged 85%. Its founder admitted on December 20 that he’d wisely dumped his entire stake, using the full force of the first-mover advantage. True Believers were left holding the bag:

Of the nearly 2,000 cryptos, there are many that have become worthless and trading volume in them has died down. Even among the larger ones, there are plenty that have plunged 90% or more. In other words, most of that wealth has already vanished or was transferred to sellers who took that hated fiat money and laughed all the way to the hated bank. What remains is a mop-up operation that may drag out for a while, kept alive by some exciting but fleeting moments of hope.

Back to fiat money. Read…  The Fed’s QE Unwind Hits $250 Billion

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  145 comments for “Crypto-Mania Collapse Update: $638 Billion Gone

  1. Frederick says:

    I’m just glad that I stayed away from buying into this Ponzi scheme The hype was pretty heavy when they were running up and lots of snake oil salesmen were pushing their merits online everywhere Didn’t like what I was seeing

    • Joan of Arc says:

      This article could have been called “The Death of Cryptos” except that Bitcoin can fall a lot further, like down another 99%.

      • Álvaro says:

        I think all cryptos will eventually fade into oblivion, meaning its price could actually drop to $0.00

    • sierra7 says:

      Way back in the day, the SF Examiner Sunday edition had a neat few pages of comics. The front page always featured “Maggie and Jiggs”. Above the comic strip itself, in bold type was printed this phrase every edition: “What Fools These Mortals Be”!
      Yes, indeed. “What Fools These Mortals Be!”
      (W. Randolph Hearst did have a sense of humor after all!)

      • alex in san jose AKA digital Detroit says:

        I believe the whole premise behind Maggie & Jiggs was that Jiggs had invested in some stock or something and become rich, but he really just wanted to drink and eat Irish Stew with the boys. Meanwhile, his wife, Maggie, took this rich thing seriously, and was all into fashions and elegant furniture and all that. The artist had a great time drawing all of this, and I believe the strip became a sort of bellwether of what fashions were becoming big.

        But yeah the underlying jokes was, “Easy come, easy go”.

    • Rocco says:

      Agree, a classic ponzi where the rich benefactors of the ponzi exited at the top.

  2. hidflect says:

    I hear IOTA has a chance long term. Not that I’m ever going to buy…

  3. Mike Earussi says:

    Stupid is as stupid does.

    There’s a sucker born every minute.

    Never give a sucker an even break.

    Never underestimate the power of human stupidity.

    Anyone care to add to this list? (it’s really hard not to laugh).

    • Quack says:

      Laugh the one who laugh last :)

    • raxadian says:

      This time it will be different!

      Susane researched it.

      X is the future of Y!

      You have to get into this, is easy money!

      Everytime I think I have seen the limits of human stupidity, someone breaks the previous record.

      • sierra7 says:

        “In God We Trust”
        For everything else you better be “packing”!

        • raxadian says:

          Death and Taxes have something in common, you can only avoid them for so long.

          If everyone is running somewhere and there is no danger chasing after them, take the time to wonder if running makes sence in the situation.

          In God we Trust, but you aren’t God.

          If you think something is fishy it is because the fish are slaping you with their fins.

          There is always a bigger idiot and is likely to be yourself.

        • Shane From Melbourne says:

          “In God We Trust”

          Everyone else pay in cash……..

    • Tom says:

      To paraphrase Albert : Two things are infinite ; Human stupidity and the universe. He wasn’t sure about the universe.

      • raxadian says:

        Current theory is that the universe is not infinite but is expanding. So we could say two things are always growing, the universe and human stupidity, but the difference is that universe might someday stop growing.

        • Setarcos says:

          Raxadian, did they happen to say what is now in the area where the universe is expanding into?

    • Drater says:

      …at least you can cuddle with your Beanie Baby

    • Michael Fiorillo says:

      The human capacity for self-delusion is infinite.

    • Peter Starr says:

      “No one ever went broke underestimating the intelligence of the American public”

      H.L. Mencken

    • elysianfield says:

      “Anyone care to add to this list?”

      “…I am shocked…SHOCKED!”

    • Juanfo says:

      The house always wins.

  4. MC01 says:

    I have a question: besides the easily recognizable true believers who did a lot of promotional work for free, not unlike any self-respecting cult, who paid for all the celebrities who shilled cryptocurrencies? Who paid for the suspiciously favorable pieces in the media? Who paid for the professional trolls who were everywhere promoting Litecoin, Ripple and far more obscure “tokens”?

    I honestly doubt all these people accepted cryptocurrencies as a payment for their services: somebody gave them US dollars, euro, British pounds and the like. Which may be much despised but, differently from cryptocurrencies, cannot be “mined”: they have to come from somewhere.

    • Paul says:

      My understanding, and I believe it, was that Bitcoin in particular gained attention by repetitive trading amongst large, early holders of it to demonstrate significant trading volumes and a rapidly escalating price.

      That was particularly true in the early days when the price was escalating from $500 towards $2,000.

      By the time it got to $2,000, it had developed a life of its own, with hype pulling in more investors, raising the price, which in turn increased the hype.

      Anything with price momentum will attract momentum traders, and they are probably the majority.

      It can be anything, tulips, the internet, silver, etc.

    • Wolf Richter says:


      It’s a murky world. The SEC is now cracking down on these celebrity promos of ICOs paid for by the entity behind the ICO. This sheds some light on it:

      • MC01 says:

        Thank you very much for the article, very informative. :-D

        To be honest I don’t feel John McAfee is worth $105,000/tweet, but I feel he may be talked down to considerably less than that.

    • gary says:

      In regards to your question MC01, nobody has to pay for the favorable pieces in the media.

      The media just runs with whatever is “hot”. The media then benefits by attracting viewers, which builds on itself. Classic advertising model (of course there are always a few strategically placed articles, endorsements, etc. to help get the ball rolling).

  5. maurice waldman says:

    Yet the Dollar has collapsed even more to 97.5 % of its original value.
    That is a bigger ponzi. ONE BITCOIN IS STILL worth ONE BITCOIN

    • Timthetiny says:

      Nonsensical rambling.

    • Harvey Cotton says:

      97.5% of its original value since when? The creation of the Fed? Let’s see what Bitcoin’s value will be in 2123. My guess will be 0 fill in the fiat currency.

      • Mel says:

        Collapsed to 97.5% of its original value? If inflation runs around 2%, that would be since the middle of 2017, roughly.

        • Javert Chip says:

          LOL & nicely played.

          This offers insight into “Maurice’s” ability to handle money and math.

    • Dick says:

      And 1 dollar is still.1 dollar? What’s your point?

    • RepubAnon says:

      My snark alarm just went off… :-)

    • Wolf Richter says:

      maurice waldman,

      Yeah, since 1913… that’s 106 years. Cryptos can do that in 106 days! So why wait 106 years? Get it over with quickly. Plus, you don’t even earn any yield off your cryptos to compensate you for the loss of purchasing power.

      I always laugh when I read these comparisons. They show how twisted the crypto promos are.

      • Austin says:

        You think bitcoin can pop back to $20000 if the etc gets approved? (Trying to cash out my crypto stupidity)

    • Memento mori says:

      How has the dollar collapsed 97.5% ?
      Could you please elaborate as your statement is confusing. Yes, one dollar bought more in 1913 but workers made maybe $200 per year in salary compared with $50k nowadays? I would say that we have much better living standards and higher purchasing power nowadays and that is what matters, all depends how you define value I guess.

      • Frederick says:

        Momento mori Much better living standards or just more standard of living drawn from the future through huge debt I wonder which

      • Mark says:

        Generally agree, whining about 2% inflation is silly, and we are infinitely richer today than in 1913. A dollar may have been worth more in 1913, but workers made nominally much less.

        Also, even the wealthiest person in the world in 1913 couldn’t buy an iPhone, a flat screen TV, a cross country flight, a reliable safe car, antibiotics, etc. Now nearly everyone in the rich world can.

        And as you’re not putting “fiat” US dollars in a shoebox for decades, 2%/year inflation is NOT a problem. A simple index fund portfolio has far, far outpaced inflation since 1913. My bet is it will continue to do so long into the future.

        • A Citizen says:

          Funny how no one ever mentions my 75″ 4K Sony flat panel purchased for $3,000 USD in 2016 cost around $1,000,000,000 in 1913 dollars…


      That is true for anything. Every object is equal to itself.

    • Bitwho says:

      Bravo! Decentralized peer to peer value transfer system. First time in history. Try moving your gold/silver across a border. BTC just remember your password and recreate the wallet wherever you land. BTC = sound money. Not putting 10% of your portfolio in it would be crazy. BTC is up almost 100% compared to this time last year. lololol

  6. John Taylor says:

    The “market cap” measurement of an entity’s value in dollars based on the number of shares times the value of the latest tiny transaction never made sense, especially for illiquid securities.

    The $638 billion gone was never there in the first place. Someone makes a mistake of buying an illiquid asset like one of the many cryptos with a market order, and a crazy spike gets formed.

    Add to that the fact that these unregulated cryptos are ripe for pump-and-dump schemes, and the crazy valuations shouldn’t shock anyone.

    These gyrations have about as much meaning to as the pictures flying by on an a slot machine.

    • A Citizen says:

      The use of the term “Market Cap” in the case of crypto has never been accurate and never will be. Other currencies are expressed as having a relative value to another entity (another currency, a security, or a commodity). The theft of the term by the purveyors of crypto, only previously used in describing equities, was weak effort to lend some form of twisted credibility to an equally twisted narrative describing the non-existent crypto value proposition.

  7. TWolfe says:

    I see crypto as just another commodity to speculate on – and one of the more comparatively viable & honest one’s at that. Essentially anything that can’t be counterfeited at will by a government (including paper Gold & Silver) attracts my attention, but what I don’t see reflected in articles like this one are the merits of crypto such as…

    – Borderless
    – Liquid
    – Universally recognized and exchangeable into local currency
    – Impossible to confiscate without consent (if you hold it yourself offline)
    – Can be used as a currency or at point of sale (granted not well adopted)
    – The buyer chooses whether he/she wants transparency or privacy
    – And one aspect that few attach importance to is that you don’t have to be an adult, hold a bank account, or hold any type of citizenship to own crypto.

    Can anyone recommend any non-crypto currency asset in existence that
    holds most of the attributes above, and which cannot be counterfeited or have it’s price artificially dictated by governments, institutions or individuals? And can you honestly say that these attributes will be of any less value going forward as governments inflate currencies, increasingly restrict capital flows, and easily manipulate physical commodities?

    Do I believe crypto is money or has intrinsic value? No, but neither does Amazon stock have either of those attributes; nor is a share of it any more tangible than a Bitcoin. In fact there was no shortage of detractors calling for the online book seller to go bankrupt when it’s share price hit $5.60. But the few that saw value in it during a bear market reaped the reward for the risk they took.

    *That said, I’m not bullish yet on crypto. The bottom certainly does not look to be in for Bitcoin and especially Alt coins, so even my initial entry point for BTC starts at $5888 and purchases double only with every $200 it falls.

    • Kent says:

      The US dollar has all of those attributes except 4. And I do not believe any of the cryptos really have 3, 4 or 5.

      And I would much rather have my government deciding when and how to inflate my currency rather than some programmer in Pakistan. But the beauty if this is to each his own.

    • Crysangle says:

      I don’t see it as to speculate on, it has that option though, as well as to attempt to store wealth . I see it more as a private transfer system, for now to be used out of and back into fiat, maybe as an alternative to know, maybe to explore or trial its possibilities . As ownership during transfer time need only be short, slow variations in valuation ( even those above except crashes) mean little to one of its base uses . People will use crypto where it is not feasible to use normal banking etc. As crypto has not the market depth of fiat, its value will be volatile and open to fads and speculation. It may settle, take off again reasonably, go volatile again, go out of use even ( I don’t think so completely) . Too many parameters to make a solid guess. I don’t own crypto, but I have nothing in particular against it, and appreciate its potential as well as some of the ideals that go with it, those who are happy enough with fiat are not going to rate crypto too highly, will see it as something of an experiment. So I don’t write it off, I don’t know its future either as that will depend a lot on other circumstance in the world.

      • Javert Chip says:


        I’m an old retired CFO. I read what you wrote 3 times, and consider it “elder abuse”.

        • Crysangle says:

          I do apologise.

          It is possible that there is no bridge between encoded electronic representation and real world meaning that is tangible enough to be portrayed in a way that can be grasped fully by other than theoreticians… that is my theory anyway. It sure keeps people occupied though, Rubik would be proud, it is like a million sided cube that you can’t peel the stickers off to complete.

        • Crysangle says:

          I don’t see it as to speculate on – you are guessing how much a series of digits are worth

          It has that option though – why not speculate (guess) , but you are guessing what value anyone else guesses to place on those digits , when they choose to exchange those digits with each other for things more material.

          As well as to attempt to store wealth – might be worth something tomorrow.

          I see it more as a private transfer system – where each side agrees it will represent something, even if that something is the collective guess that is understood as its market value.

          For now to be used out of and back into fiat – to transfer fiat to each other, using the current market value as its meaning.

          Maybe as an alternative to know – an alternative payment or storage mechanism that might prove useful.

          Maybe to explore or trial its possibilities – to see how it can actually be implemented as part of a wider economic system.

          As ownership during transfer time need only be short – because if you want to transfer fiat to someone, you buy at existing rate, transfer immediately, the receiver then cashes out immediately.

          Slow variations in valuation ( even those above except crashes) mean little to one of its base uses – that it changes a fraction of a percent in the minutes of purchase, transfer, and cash out is not an important variation compared to total value being transferred.

          People will use crypto where it is not feasible to use normal banking etc. – those are known.

          As crypto has not the market depth of fiat, its value will be volatile and open to fads and speculation – if market cap is in the trillions, if billions are traded every second, someone dumping a tonne will not affect the price to such a degree.

          It may settle – reach a steady market price but not be taken up further.

          Take off again reasonably – start a fresh slow uptake that is cautious due to previous losses from over valuation.

          Go volatile again – flash bang wow.

          Go out of use even ( I don’t think so completely) – it still serves a purpose to trade with it as long as there is the smallest of market working, no matter how low the unit price.

          So I don’t write it off, I don’t know its future either as that will depend a lot on other circumstance in the world – its use will depend on everything from what happens in fiat regimes ( e.g. hyperinflation) , currency controls and taxation, national legislation etc. etc. etc.

      • nick kelly says:

        ‘People will use crypto where it is not feasible to use normal banking etc.’

        Pls give example of where it is not feasible to use normal banking.

        BTW: I had a letter to the Ed in the Globe and Mail early this year pointing out that BC ‘s don’t belong to you they belong to your computer. A guy in the UK threw out a computer with millions on it. Gone.
        Ya I know he should have done backups etc. but how gadgeted do you need yr life to be?

        I ended by saying that: ‘telling folks you are a BC investor is like telling them you have a safe full of cash. Anonymous cash. Now all they need is your password.’

        Sure enough, along with all the virtual thefts, one guy has been robbed of his BC by thugs who broke in and forced him to transfer them.
        At least cash has serial numbers.

        • Crysangle says:

          The most obvious is where there exists capital controls, where national currency is either restricted in use or even more volatile (so keeping own currency is not feasible), or where foreign currency is absent for exchange. You can run right down to avoiding everyday banking restrictions, as well as of being tracked. Crypto is not the only option used, but you are not going to hear about it if it is either. I did an hours search to get an idea, and guess what, there were very few specifics (hard data) from any site – there is a reason for that. Other known uses are for where ordinary banking services are not available. If you insist on seeing crypto as only useless speculation and fad transactions , I won’t stop you either though.

      • Dan Romig says:

        I am not a fan of the Fed’s control of the US dollar. I understand the motivations to escape the Fed’s fiat currency and all that goes with it that created bitcoin. However, I do have something against it.

        It reminds me of driving through western North Dakota’s Bakken oilfields years ago and seeing dozens of wells burning escaped Nat gas into the night sky. Wasteful burning of energy pisses me off. Bitcoin wastes electrical energy.

        • enigm18 says:

          The proof-of-work consensus mechanism is highly inefficient in terms of energy. No different than the early days of hardware engineering where computers filled entire rooms to run basic calculations. Software, even Bitcoin, can be improved and upgraded. These calculations are always linear assuming the worst which never represents the real world.

          Look at proof-of-stake (PoS) effectively running a validation node instead of “mining” you are validating transactions on the network while bonding part of your account. A node operating a major portion of the network, without additional equipment, could use 1 Watt of energy. If nothing else I hope it helps you sleep a bit better knowing the future won’t be wasteful ASIC and GPU mining rigs. Multiple networks are using PoS nows such as Tezos used in the example below.

        • Dan Romig says:

          Thank you enigm18. I read the link, but it is a bit over my head as I’m not fluent in code or software language.

          It makes sense that there will be more efficiency in computing inside the crypto-relm, and yes I will sleep better tonight.

    • Michael Fiorillo says:

      Yes, Bitcoin is borderless, but so is the US dollar, which is far more widely accepted.

      But it’s not liquid by any real world, common sense definition.

      As for convertibility into other currencies, the dollar remains superior.

      Bitcoin can easily be rendered worthless, if not actually confiscated, by State actions outlawing their ownership, transactions using them or conversions into the sovereign currency.

      It may theoretically have the potential for widespread use in exchange, but in reality is not used in any meaningful way.

      It’s far more traceable and less anonymous than those touting it admit, and law enforcement already has tools to trace transactions and identify wallet holders.

      As for non-adult/ non-citizen ownership of Bitcoin, that’s an arguable and relatively minor point.

      Perhaps some day there will be widespread uses for Bitcoin (or whatever might supplant it) and the blockchain. For that to happen, there will also need to be huge reductions in the economically/thermodynamically insane energy use required to maintain mining and accounting in the system.

      Proof of Bitcoin/blockchain’s fundamental unviability is the ratio of energy consumption to its actual, quantitative economic use and utility. If the reports of the current and projected energy costs of running the blockchain system are even remotely correct, then it would have to count as one of the greatest malinvestments ever.

      Ninety- nine percent or more of these digital coins/tokens may go poof, but the energy used to “create” them is a real, material thing, with real material impacts on the world. That so much energy production has gone to such economically sterile and null endeavors borders on the criminally insane.

    • Austin says:

      Might want to hold off. Bought crypto and I’m bleeding bad. (I didn’t even get it at the peak, bought it 60% off and I’m still down hard). I’m just looking for a rally I can sell into, not even sure ill for it to hit $20000 again (if ever)

      • Frederick says:

        That’s too bad but I know the feeling I bought silver at 34 dollars so I’m down more than 60 percent Diversification is the trick which thankfully I’ve done so I won’t starve

        • Austin says:

          but at least you know your silver will always retain some of it’s value. I bought crypto know it was going to collapse eventually, however I was just looking buy the dip and sell it off relvitly soon. (A speculative trade). Several months later I’m still here, stuck in this mess

      • Matt P says:

        Cut your losses. Better to get something now and invest it somewhere that gives real returns than to lose it all later.

  8. Davebee says:

    Just a short note for Wolf: Wolf isn’t your RT pal Max Keiser a True Believer in this near criminal Crypto c*%p? (He’s always pushing them while attending C seminars on air)
    So, why do you keep appearing on the MK show? Surely if you think Crypto’s are the road to perdition for the rest of us you should stay off Max’s soap box and never darken his pixels ever again?

    • Wolf Richter says:

      That’s easy to answer: Every now and then, Stacy sends me an email and asks if I’m available for an interview with Max. I say yes, and we set the time. And then we do the interview. I’ve been interviewed on all kinds of radio shows, podcasts, etc. NPR even. Most of the time, I have no idea what all else these shows get into. Max has his shtick. Above all, he is wild and funny. His show is a mix of entertainment, humor, and analysis. Take it seriously at your own risk.

      Obviously, we don’t see eye-to-eye on many things, including cryptos. I’ve been poohpoohing the entire crypto space for a long time. It was a very unpopular and lonely position to be in while everyone in the media was promoting it and gushing about it, and people thought they were making tons of money betting on these things.

      I’ve had the government inquire indirectly (via a trusted third party) what my relationship with RT is because they’re monitoring RT. I’m not sure if this was a form of intimidation or just an inquiry. For now, I’m still agreeing to be on Max’s show, and I’m enjoying it.

      • elysianfield says:

        Mr. Richter,
        Does Max have any influence with RT? Considering RT’s demographic, I would like to see the shows closed captioned…with my poor hearing, I would find Keiser much more entertaining if I could read (and understand) what he was saying…instead of guessing.

        • Wolf Richter says:

          I don’t know what his relationship with RT is. His show is just one of many shows on RT.

          Maybe you can inquire directly with RT about this. This is a valid point. If they want to increase their audience, a good way of doing it would be via captions.

        • Adam says:

          If you are watching on Youtube, there should be a closed caption option on the lower right hand bar of the video window

  9. Looks great. Very solid support building on these products. Looking forward to the next big wave. Blockchain is now being used in permissioned fintech (world bank 79m) and crossing over into real world applications. Then the fintech will have something to connect to. Then valuations will have substance. Great times to come.

    • Matt P says:

      “Solid support” More technical analysis mumbo jumbo numerology hooey.

    • Pants Down says:

      Spot on. one can see that by comparing:
      1) gold over 50 years and
      2) BTC over last 5 years !!!
      almost identical…technical set up.

    • A Citizen says:

      Got news for ya, ‘bra. Big fintech already knows that crypto is major technological problem in search of a Muppet to implement it. The technology, quite bluntly, isn’t even good enough to provide sufficient material to form a suitable joke and appropriate punch line.

      There isn’t one single problem in the entire fintech space that can’t be solved more efficiently with another, already proven technology.

      Unless you need to bypass capital controls and launder funds.

  10. L Lavery says:

    Trying to measure the value of bitcoin using its market cap is like trying to measure the distance of a rainbow by bouncing light off it.

    • Joan of Arc says:

      I think measuring the distance of a rainbow by bouncing light off it is just as doable as getting to one end of the rainbow and finding a pot of gold. I have never tried the light experiment but failed getting to the end of a rainbow before it disappeared.

  11. Ron Acker says:

    Thanks, Wolf, I love your reporting. At the end of last year I sold all of my modest stake in Bitcoin,
    my Ether, and Lite Coin. The hysteria just seemed to be too good to be true. I reported my profits and paid my capital gains taxes. With my profits I was able to buy a Calligaris dining room table, six leather covered chairs and an Australian Aboriginal rug.

    • Austin says:

      And as soon as you sold…. I rushed in as a bad holder. You never think you’ll get caught up in a buble until $8000 of your money evaporates in to thin air. You were an early mover, good for you

  12. Will says:

    What’s really affecting the market is fake and exaggerated news from apparent journalists like you all… And the banks sweating in there boots buying up small amounts and selling off in large amounts to try to put off the average investor… Holdl and don’t listen to the hype and bull is my advice

    • Wolf Richter says:

      Hilarious! Thanks for a good laugh! But also a little sad.

    • Austin says:

      My missing $8000 would argue with that. No crypto hyping will fill the empty hole in my wallet. Snakeoils man

      • elysianfield says:

        Your loot was spent on liquor and loose women…we frittered away the rest….

      • JZ says:

        Austin, i think the fundamental mistake related to gold and crypto is that people use them to get $ like you did. People actually want $. $ is the goal, and gold and cryptos are vehicles to achieve that goal. That is the problem. I think if I want $, I will go buy $ denominated assets, stocks, bonds, real estate, royalties, even commodities. I want to own gold or cryptal because I do NOT want to have $ since I think $ is problematic. If you are using gold crypto to get $, then you are disappointed. For those who own gold and crypto because they don’t want $, they are fine.
        I understand crypto can NOT take over other currencies because there
        is no lawyers and armies to back it up. But hey, it is also an account nobody can confiscate or freeze as long as internet is there. That is the attractiveness of cryptos. You are NOT under the control of banks and central banks. Not a single person has the authority, the internet is the authority. This is sexy and rebellious. Like ripping the dicks off the bankers. But hey, if you are robbed, or hacked, there is no authority to help you either. Don’t trade crypto and gold for $. Own them for what they stand for, anti authority and freedom. With that, you will NOT be sad when you seenprice falling, you will be happy and accumulate more.

    • RepubAnon says:

      I didn’t listen to the “hype and bull” – which is why I didn’t buy any cryptocurrency. The world runs on barter – and currencies only exist to make it easier to exchange things of value. (Remember all the “barter tokens” that got issued in the 1980s when bartering was the hot thing?)

      Cryptocoins, like currencies and a commodities, only have value if they can be exchanged for something. If someone can make an inexpensive artificial diamond that can’t be distinguished from a naturally-occurring one, diamonds lose value. It’s the classic Tulip Craze problem – except that with a tulip, you can at least get flowers. Cryptocoins are just ones and zeros.

      • Jason Ipswitch says:

        I’ve read several pieces of SF over the years that have mentioned digital currencies tied to real or virtual goods or services. There’s nothing (save governments) preventing some person or group from launching a cryptocurrency that is freely convertible into a fixed amount of gold, or storage space, or processor cycles, or bandwidth on a file-sharing network.

        The current round of cryptocurrencies do not seem to present any such options, although some of them seem to go to great lengths to sound like they do.

    • Javert Chip says:


      You can string one of those brass crypto things on a ribbon (color of your choice) and wear as a participation medal.

      Everybody will immediately know how cool you are.

  13. David Rabinovitz says:

    The losses are not that big. Someone I know acquired Bitcoins in a transaction at under $100 per coin. When BC reached $342 or so he gifted me a wallet with $5 of value to encourage me to spend it to see how BC works. I wasn’t sufficiently interested and let it sit. At the peak the wallet was worth $300. It is not worth probably $100. I did not lose $200 when the value plunged. I’m still ahead of the game. Those losses are only real if everybody bought in at the peak.

    • Frederick says:

      Not really It’s NOT so good for someone who bought in at say 10k is it ? The peak was 19,700

      • alex in san jose AKA digital Detroit says:

        Back when a 10th of a Bitcoin was worth about $10, I had someone “give” me that value. Except I never saw it. I never got anything in the mail. It’s all imaginary. Somehow, if I take enough drugs (LSD is popular in Silicon Valley) I’m supposed to convince myself I own something I can’t hold in my hands, never got in the mail, never got given by my bank, etc.

  14. plunge says:

    Has anyone considered that this plunge in crypto is being engineered ?. Where there is money to be made anything is possible, remember that Australian mining share that was 25p and went to about £40.00 (and many were buying) on a rumour that it had discovered a rich vain, another rumour started that it was a false rumour, panic ensured, people started to sell, price went down to about 3p, turned out the first rumour was true!, the share eventually went to about £126.00. Someone made a lot of money!.

  15. Dave P says:

    Crypto’s are a reflection on our society. The reflection is very unflattering.

  16. Sadie says:

    When some of the crypto currencies started trading on the futures market the short positions may have been very profitable for some. Maybe one of the founders sold at the top and also took a short position? Of course it was converted into $ while laughing all the way to the bank.

  17. Jon says:

    Most people are still up huge on Bitcoin as they bought from $1-$1000.

    • LessonIsNeverTry says:

      Considering the trading volume during the mania versus the $1-$1000 phase, your statement is almost certainly untrue.

      • Crysangle says:

        In theory net=0 , all that will have happened is some will have gained, some lost… that aside from actual benefit of using it over say fiat (not measurable) minus service costs. So the question is just if the numerical profits from value trading are heavily skewed to very few people, or if the losses/profits are quite evenly spread across users giving an overall sentiment that its use is acceptable.

    • Frederick says:

      Jon that’s VERY hard to believe as normally the vast majority of the suckers / sheep get drawn in during mania period or while it is soaring and getting a lot of attention Historically speaking that’s the case anyway

  18. Cripple says:

    This guy is the greatest promotor of Ripple:
    He is trying everything to justify his view, from Ayn Rand to Karl Marx.
    You have to read it to believe it.
    He and his “followers” are all in with Ripple and are great Hodlers.

  19. RD Blakeslee says:

    Does anybody remember Bill Mauldin’s “Stars and Stripes” Cartoon caption: “Give me the Good Old Terra Firma”?

    The cartoon showed a high -flying airplane and a couple doughbys slogging through the mud.

    Fair allegory for crypto discussions, I think.

  20. a reader says:

    A question to the “finance historians” amongst the readership: what classes of assets ever recovered after a 70-80% plunge in their prices?

    This may give a data point as to whether this drop is terminal to the cryptos as the speculative investment.

    And if it is, what other asset classes will the freed up money flow?

  21. viny1l says:

    Money that never existed ‘disappeared’.

    Does anyone think all the shares of stock could be sold for the ‘market price’? No, if it was all for sale, there would not be enough liquidity to buy it at anything like the current trading price.

    • Javert Chip says:


      Not exactly sure what you’re trying to say, but if ALL shares in the market were immediately for sale, the price would collapse pretty quickly.

      However, generally speaking, all the shares in the market are indeed for sale at the “right price” (an individual & emotionally determined value).

      (Good) stock investors look for an enterprise that’s an ethical, profitable, going concern that meets a customer demand. Cryptos don’t meet any of those requirements, except expecting the tooth fairy to make them rich.

  22. Ambrose Bierce says:

    How much would you pay to spend money any way you please? If the price of Bitcoin stabilizes will it gain in popularity? Bitcoin has caused people to apply the rules of the illusionary currency they already have with this new currency. There ain’t much difference, the technological improvement is minor but significant. At this point in time it is outside government regulation, and history tells us that never lasts long. So in ten years we will all be spending Federal Reserve Bitcoins, and meanwhile we refuse to accept it, or perhaps we know that government will steal the thunder, but that didn’t happen with the internet. Finally I have read reports from brokerage houses talking about long term development of crypto. But the blog is a nest of reactionary opinions.

    • Wolf Richter says:

      No major central bank is considering a bitcoin-like crypto (and no, Venezuela is not a major central bank). They’re all very clear about it. What a few smaller central banks are studying is a “digital” currency denominated in and pegged to the country’s current currency. So just a purely digital version of the current currency.

      The Fed isn’t even studying a digital currency. It said the current payment system is already digital and works fine.

      • hotairmail says:

        The Royal Mint of England is looking at a gold backed ‘crypto currency’.

        • Wolf Richter says:

          Not quite. If you go to the Royal Mint’s site — and get away from the ceaseless crypto hype — you’ll see what this digital entity called RMG is:

          “RMG is an alternative way to invest in and trade physical gold.”

          “It enables the transformation of physical gold into a modern digital asset, making it the perfect medium to record and transfer ownership.”

          So a way of owning/trading “digital gold” instead of physical gold.

      • Bobber says:

        I would say the major central banks have one last chance to reform their ways. If they continue tightening the money supply and reducing speculation, the major currencies will be OK. If, however, there is a continuance of money printing in response to a normal recession in the future, this would indicate central banks have no intention of normalizing our debt and deficit fueled markets. At that point, maybe Bitcoin makes another huge run before disgusted populations take away central bankers’ power to introduce moral hazard and screw with basic societal contracts.

        • Wolf Richter says:

          Yes, thanks. That article totally supports and spells out what I said. Read it. It says “DIGITAL” currencies (not crypto currencies, a huge differences) are essentially not needed and pose a lot of challenges though they might offer some benefits.

          It also says this:

          “So far, only a couple central banks have issued their own digital currencies, Ecuador and Tunisia among them. Sweden, where the use of cash is evaporating faster than almost any other sizeable economy, is contemplating whether to issue an e-krona.”

          You see, DIGITAL currencies are a digital version of the existing fiat currency.

        • alex in san jose AKA digital Detroit says:

          Sorry, but I see “DIGITAL” currencies and I’m reminded of that scene in South Park “Aaaaaaand it’s gone!”

      • Sadie says:

        The investment banks and the Federal Reserve have taken a novel interest in block chain technology (not to be confused with crypto currencies) and the capability to track transactions.

  23. hotairmail says:

    Crypto currencies are less like currencies and more like tulip bulbs….perfectly useless in and of themselves and they multiply from season to season.

  24. rj says:

    Funny that.CME top ticked it.

  25. Sign of the times. Since the time Trump was elected everything now seems like a ponzi not just the cryptocurrencies.

  26. I bought a stash of Bitcoin around the 990 level figuring the Chinese would pile into the trade at the 1,000 level and send Bitcoin to the 50,000 or 100,000 level within a year or two. If it wasn’t for the Chinese government Bitcoin would have surpassed the one million dollar mark already.

  27. Bill says:

    Forget cryptos, I have some lovely tulip for sale.the next BIG thing.


    Goldman Sachs loaned their imprimatur to the whole BitCoin fiasco just a few months ago. Bottom line is that BitCoin is not going to disappear after it hits bottom and is snapped up by the Central Banks on the final dip. And once they own the lion’s share of crypto they will then get into trading it BIG time.

    BitCoin has a secret inventor that seems to be indistinguishable from the NSA when one takes a real close looksee.

    Like they said in the BIG Short…..’it’s just a gully’.

  29. Danger Dan says:

    I can’t help but bristle whenever someone claims Bitcoin has no intrinsic value, as if though the global network distributing the blockchain were just somehow superfluous and wished into existence rather than actually sustained by resources committed by users (skin in the game). That *is* its intrinsic value. If it’s a defensible argument to claim that Bitcoin is without value, surely it’s equally defensible to claim commodity derivatives is also without value.

    The matter of altcoins is a tricky one. The market is still immature and so far only really has need for one base cryptocurrency, which is Bitcoin. Utility coins (ones designed to be used as payment for the renting of resources such as virtual storage) are also in sort of a funny position as there isn’t an overwhelming advantage to those over simply paying in fiat or Bitcoin.

    Bitcoin Cash is a demonstration of the folly of democracy (that even an idiot is worth a vote), Litecoin is more of an experimental Bitcoin, as such I’m surprised anyone actually believed it would rise further in value.

    Bitcoin has been mostly stable lately, and it was mostly a sane market up to $9k right before every Tom, Dick and Harry jumped in and pumped the price up to $19k. Since it’s still holding at $6k, it’s not without hope.

    The premier privacy coin, Monero, has also rebounded and generally has held its value well in the $100-$150 range. In terms of cryptocurrency use cases, a coin like Monero has clear utility.

    So to summarize, the reason I had to comment here was because I don’t believe there is much relevance to how much pretend value the cryptocurrency market overall sheds. Most of the ICOs and nascent me-too coins should not have fooled anyone and is probably not all that dissimilar to the other get-rich-quick nonsense like dodgy FX brokers. Caveat Emptor. Just because a bunch of grapes are bad doesn’t make all grapes bad.

  30. Matt P says:

    What fundamentals exist in a fictional currency?

    • Kenny Logins says:

      It’s fundamentals as a decentralised anonymous online method of wealth transfer.

      People buy dollars on the fundamental feature of its reserve status, widely accepted value etc.

      I keep having to write it because people seem emotional on the issue, but if you put £1 a month into btc since 2008, you’d be a multi-millionaire now.

      2009, 2010, 2011, up.

      If you put £1 a month into btc from 2012 you’d still be up hundreds of percent.

      2013. Up.

      2014. Up.

      2015. Up.

      2016. Up.

      First 3/4 2017. Up.

      2018, probably up.

      **only** if you tried to game the btc price would you have lost out.

      If you just keep a bit to spend as you go along no one has ever lost out.
      If you just buy a small amount all the time no one has lost out.

      Cryptos generally are bollocks.

      There is a market for a few, primarily btc which is widely accepted and I’ve been using for about 5yrs now without issue.

      • alex in san jose AKA digital Detroit says:

        In 08 a bitcoin was less than a dollar. I agree.

  31. Matt P says:

    Funny that all crypto currency have their value expressed in terms of fiat. How can they be considered a serious threat to fiat if their only value is speculation in terms of the fiat value?

  32. Laughing Eagle says:

    Crypto’s main problem is it can get hacked and you cannot even touch it. The central banks getting into cryptos, please.
    Gold backing another hype story because like I said it can get hacked and no recourse for recovery.
    And if Goldman is in on it then another good reason to stay the heck out.

  33. faithdefender says:

    Kucoin is going into Australia, Australians have a gambling addiction and worship the god of materialism. i wouldnt cast off crypto just yet.. fiat will tumble, then where you going to look ?

  34. Breamrod says:

    in all fairness to Max he was pounding the table on bitcoin at 11.00. He just overstayed his hand.

  35. Escierto says:

    I am not a fan of cryptos but my one thought while looking at those charts was one day the charts of Amazon and Google and Facebook will look exactly the same. Yet everyone who holds the stock of these boondoggles all thinks they are going to the moon. Otherwise they would get out now when they are at their peak. It’s human nature to always think, this time it’s different.

  36. roddy6667 says:

    Digital Beanie Babies.

  37. Mean Chicken says:

    What goes down, must come out. While I don’t want to sanction stupidity as a global sport, still I have to point out yes, it’s a small step for these square folks but they’re taking a big fall for all mankind.

  38. chris from dallas says:

    Do not forget the poor BitCoin Miners and their expensive, specialized computer rigs purchased to make 100%+ return per year.

    A friend of my son was building rigs and mining Bitcoin 3 years ago, couldn’t make enough to pay the electric bill, quit, and has since built a great career in business.

    Last fall a cousin of mine spent about $2,500 (and untold unpaid hours) to purchase a rig when BitCoin passsed $9,000.

    Another relative “invested” when BitCoin was around $8,000-$9,000 which probably represented 50-100% of her net worth.

    Perhaps it is easier if we all think of this as “training” in how *not* to “invest”.

  39. Wendy says:

    It would be interesting to take one bitcoin and the equivalent amount of gold, and put them into a safe deposit box for 10 years. Neither pays interest, so it should be a fair comparison. A $12K bet. If bitcoin goes to the moon, you will be happy, and if it goes to zero, you will not have a 100% loss.

    The power of diversification.

  40. Augusto says:

    It would be interesting to know how much real money has actually been put into Cryptos? Market Cap calculations are a contrivance created by the financial markets to pump the myth of untold wealth- a dubious calculation of value if ever there was one. Market Cap is just calculated on last $ traded, whether a million shares/cryptos or one. Velocity, volume or activity can give some idea, but there are a lot of phoney pumping schemes in the unregulated market by insiders. In the end the old accounting standard of “cost” on a complete (valid) “transaction” would be be best, but the finance world including Cryptios levers everything including info to the upside. In other words, I don’t think there was anything like the 100 of billions reported going through these schemes.

  41. Shawn says:

    Is there any information as to how this all affect NVIDIA and their GPUs or the Graphic Processing Unit market.

  42. Juanfo says:

    Author called the peak. Knowledge crystal ball.

  43. Mike says:

    Don’t throw the baby (bitcoin) out with the bathwater.

  44. Shawn says:

    Yes, GPU sales are down.

    “Of course, AMD and Nvidia were the hardest hit. Quarter-over-quarter, AMD’s shipments dropped 12.3 percent, and Nvidia’s decreased 7 percent. Intel, which make integrated graphics for its CPUs, saw an increase of 3 percent. And year-over-year, GPU shipments dropped 4.9 percent.”

  45. everybodytalkbullshitevenme says:

    If you need to transfer money quickly and fast then use cryptos, if you know how to speculate in a very short term choose cryptos, so cryptos aren`t for investing, btw, every time some guru talk shit about cryptos I buy, again only to speculate.

  46. Oliver Tickell says:

    Interesting thing about these cryptos is that as the value drops, so does the return on the ‘mining’ that keeps the system going. There is a certain price at which even Bitcoin will just stop working as no one can afford to mine for that low return.

  47. litecoin5evar says:

    lol. Everyone here is shitting on cryptos, but you’ll FOMO in hard as hell in the next 12 months as it becomes obvious that cryptos are the money of the future. I’ll check back. Good luck!

  48. Debra Kinsinger says:

    So, I remember when internet streaming was something that took a long time to just to explain to people 1994 -1995. After I missed knowing about the sale of the FCC Auction for the bandwidth I needed (by one week – Sirius and XM split the difference for $500.00 each), I found somebody to invest in my company.

    The new investor had access to a private satellite network and a bandwidth I could use, the money just never came through. Before long, the rest of the music industry started figuring out what was going on and how to monopolize on the trend and it was no longer a game that a regular person with an idea could get into.

    My guess is that the fall in crypto-currency is due to market makers. Its neither a Ponzi scheme nor a natural market that fell because it has no inherent value. When crypto comes back around, just like an ipo, we won’t be allowed to get in before it “goes public”. Regular people like us will get in when they tell us we must, and we’ll have to pay for the privilege.

    You’re welcome.

  49. Vernon Hamilton says:

    speculators gonna speculate

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