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Friday, November 23, 2018

Crypto Losses Near $700 Billion in Worst Week Since Bubble Burst


 Updated on 
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    Bloomberg index tracking major coins has plunged 23% this week
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    One trader sees possibility of Bitcoin slumping to $2,500


The great cryptocurrency crash of 2018 is heading for its worst week yet.

Bitcoin sank toward $4,000 and most of its peers tumbled on Friday, extending the Bloomberg Galaxy Crypto Index’s decline since Nov. 16 to 23 percent. That’s the worst weekly slump since crypto-mania peaked in early January.


Sources: Bloomberg, International Center for Finance at Yale School of Management, Peter Garber

After an epic rally last year that exceeded many of history’s most notorious bubbles, cryptocurrencies have become mired in a nearly $700 billion rout that shows few signs of abating. Many of the concerns that sparked the 2018 retreat -- including increased regulatory scrutiny, community infighting and exchange snafus -- have only intensified this week. Even after losses exceeding 70 percent for most virtual currencies, Oanda Corp.’s Stephen Innes has yet to see strong evidence of a capitulation that would signal a market bottom.

“There’s still a lot of people in this game,” Innes, head of trading for Asia Pacific at Oanda, said by phone from Singapore. If Bitcoin “collapses, if we start to see a run down toward $3,000, this thing is going to be a monster. People will be running for the exits.”

Innes said his base-case forecast is for Bitcoin to trade between $3,500 and $6,500 in the short term, with the potential to fall to $2,500 by January.

More of this week’s crypto coverage:

Pilgrims Didn’t Talk Bitcoin at Thanksgiving, Neither Should You
Jamie Dimon Vindicated? Bitcoin’s Back to Where He Cried ‘Fraud’
Bitcoin-Rigging Criminal Probe Is Said to Home in on Tether
These Traders Paid a 100% Premium for Bitcoin at the Market Top
SEC Crypto Settlements Spur Expectations of Wider ICO Crackdown
Furious Traders Slam Crypto Exchange for Fiddling With Contracts
Crypto’s 2017 Boom Led to 2018 Bust. So What’s Next?: QuickTake

The largest cryptocurrency retreated as much as 7.6 percent on Friday, before paring losses to 4.1 percent at 4:43 p.m. in Hong Kong, according to Bloomberg composite pricing. At $4,244, it’s trading near the lowest level since October 2017. Rivals Ether, XRP and Litecoin all declined at least 5 percent. The market value of all cryptocurrencies tracked by CoinMarketCap.com sank to $138 billion, down from about $835 billion at the market peak in January.

that supplied the crypto ecosystem. The California-based chipmaker has lost nearly half its value since the start of October as demand for its cryptocurrency mining chips collapsed and results in its gaming division disappointed.

The economic impact of the crypto collapse has so far been limited, in part because most major banks and institutional money managers have little to no exposure to virtual currencies. For most investors, recent declines in equity markets have arguably been far more important: the $700 billion slump in digital assets since January compares with $1.3 trillion lost from the market value of global shares just this week. 

While some crypto bulls have argued that Bitcoin and its peers would act as havens from turmoil in traditional financial markets, this year’s losses have undercut those claims. Gold, a traditional haven for investors, has climbed in recent weeks as virtual currencies tumbled.

“I don’t think coins are going to be anywhere near as attractive as some of the other cross-asset plays,” Innes said. “Gold prices are going to jump considerably higher and there’s an inverse relationship we’re starting to see with gold and coins.”

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