The Great Crypto Crash of 2018 looks more and more like one for the record books.
As virtual currencies plumbed new depths on Wednesday, the MVIS CryptoCompare Digital Assets 10 Index extended its collapse from a January high to 80 percent. The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000.
Like their predecessors during the internet stock boom almost two decades ago, cryptocurrency investors who bet big on a seemingly revolutionary technology are suffering a painful reality check.
The virtual-currency mania of 2017 -- fueled by hopes that Bitcoin would become “digital gold” and that blockchain-powered tokens would reshape industries from finance to food -- has quickly given way to concerns about excessive hype, security flaws, market manipulation, tighter regulation and slower-than-anticipated adoption by Wall Street.
More from Bloomberg.com: Apple Plans Another Death Blow to the Phone Carriers
Crypto bulls dismiss negative comparisons to the dot-com era by pointing to the Nasdaq Composite’s recovery to fresh highs 15 years later, and to the internet’s enormous impact on society. They also note that Bitcoin has rebounded from past crashes of similar magnitude.
But even if the optimists prove right and cryptocurrencies eventually transform the world, this year’s selloff has underscored that progress is unlikely to be smooth.
Wednesday’s losses were led by Ether, the second-largest virtual currency. It fell 5.2 percent to $172.41 at 6:21 a.m. in New York, extending this month’s retreat to 39 percent. Bitcoin was little changed, while the MVIS CryptoCompare Digital Assets index fell 2.9 percent. The value of all virtual currencies tracked by CoinMarketCap.com sank to $187 billion, a 10-month low.
More from Bloomberg.com: Florence Gets Bigger as It Heads Toward North Carolina Coast
One silver lining of the crypto slump is that ramifications for the global economy are likely to be minimal. While the market has lost more than $640 billion of value since peaking in January, that’s a far cry from the trillions erased from Nasdaq Composite stocks during the dot-com bust.
The crypto industry’s links with the traditional financial system also remain weak. That’s been a disappointment for bulls, but it’s good news for everyone else at a time when digital assets are tumbling.
More from Bloomberg.com: Super Typhoon Intensifies in Pacific and Heads Toward Hong Kong
For more cryptocurrency coverage:
Crypto Exchanges Embrace Controversial Practices as Demand Eases
Judge Applies Securities Law to Initial Coin Offering Case
Bitcoin Bulls Are Sweating Latest Test of Key Resistance Level
Matt Levine’s Money Stuff: Keep Your Bitcoins in the Bank
Crypto Wipeout Deepens to $640 Billion as Ether Leads Declines
How Bitcoin’s Crash Compares to History’s Biggest Bubbles
Updates today’s trading in seventh paragraph.
More from Bloomberg.com
- Ford to Trump: That’s Not How It Works
- Hurricane Risks Include Toxic Sludge and Lagoons of Pig Manure
- Crypto Wipeout Deepens to $640 Billion as Ether Leads Declines
Read Crypto’s 80% Plunge Is Now Worse Than the Dot-Com Crash on bloomberg.com