Bitcoin’s meteoric rise last year had many observers calling it one of the biggest speculative manias in history.
The cryptocurrency’s crash this year might help cement its place in the bubble record books.
Down 70 percent from its December last year high after sliding for a fourth straight day yesterday, bitcoin is getting ever-closer to matching the NASDAQ Composite Index’s 78 percent peak-to-trough plunge after the US dotcom bubble burst.
Hundreds of other virtual coins have all but gone to zero — following the same path as Pets.com and many other red-hot initial public offerings that flamed out in the early 2000s.
While bitcoin has bounced back from bigger losses before, it is far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest.
Bulls point to the NASDAQ’s eventual recovery and say institutional investors represent a massive pool of potential cryptocurrency buyers, but regulatory and security concerns have so far kept most money managers on the sidelines.
“You’ll have to see the market reverse before you see” institutions pile in, said Peter Smith, chief executive officer of Blockchain Ltd, which introduced a cryptocurrency trading platform for professional investors on Thursday.
Bitcoin yesterday declined as much as 4.2 percent to US$5,791.19, its lowest level since November last year, according to Bloomberg composite prices.
It traded at US$5,894 at 6:22am in New York, down 59 percent for the year and heading for a second-quarter loss of 14 percent.
Other coins including Ether and Litecoin also slumped, while the combined value of tokens tracked by CoinMarketCap.com declined to US$236 billion.
At their peak they were worth about US$830 billion.
Bitcoin may not go to zero, but it is “very much” a bubble, said Robert Shiller, the Nobel laureate economist whose warnings about dot-com mania proved prescient.
Last year’s bitcoin surge was “not a rational response,” he said.
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