STREAMING NOW: Watch Now

Bitcoin prices keeps plunging. When will they hit bottom?

The recent plunge in the stock market is a cakewalk compared to what's going on with ...

Posted: Nov 20, 2018 5:35 PM
Updated: Nov 20, 2018 5:35 PM

The recent plunge in the stock market is a cakewalk compared to what's going on with cryptocurrencies. Bitcoin prices are down more than 15% in just the past week and have plummeted nearly 70% so far this year.

Bitcoin hit a peak above $19,000 in December 2017. Its is now trading at around $4,600.

Banking, finance and investments

Bitcoin

Business, economy and trade

Digital currencies

Economy and economic indicators

Financial markets and investing

Money, banknotes and coins

Securities trading

Stock markets

Government organizations - US

US federal departments and agencies

US government independent agencies

US Securities and Exchange Commission

Shares of companies with ties to the crypto market have plunged lately too, including chipmakers Nvidia (NVDA) and AMD (AMD), which make graphics cards used by bitcoin miners. Online retailer turned blockchain investor Overstock (OSTK) and digital payments firm Square (SQ) are also sharply lower. Each stock is down between 15% and 35% in just the past month.

So it seems safe to say that the bitcoin bubble has burst. Should investors start to dip their toe back in to bitcoin and other crypyto-related assets?

Perhaps. Some bitcoin bulls are welcoming the recent volatility. It may be scaring away some of the momentum investors who rushed in, which means that bargain hunters can scoop up bitcoin at a more attractive price.

"Savvy investors understand that digital currencies are the future of money and, as such, they will be capitalizing on the lower prices in order to build their portfolios and shore-up their positions," said Nigel Green, CEO of deVere Group, a financial advisory firm.

Green compared the current shakeout to what happened with the dot-com boom and subsequent bust in the late 1990s. Many internet stocks crashed and burned, but Amazon (AMZN) is proof positive that e-commerce turned out to be a legitimate business and not just hype.

"Financial traditionalists view cryptocurrencies the way traditional stores used to view online retailers," Green said. "Crypto cynics are using this current wave of volatility to knock digital currencies. Whether it is Bitcoin, or any of the current generation of coins, or not, cryptocurrencies are here to stay."

SEC keeping a close eye on fishy ICOs

There's also a more technical, wonky reason for why bitcoin is falling.

In the past year, bitcoin has gone through a splitting process known as a fork. The first fork created bitcoin cash -- and bitcoin cash has now recently split into two other forks as well. For the average investor, this basically just means more volatility.

But there are still some potential problems for bitcoin and the legion of other cryptos out there, such as ethereum, litecoin, ripple and stellar. Their prices have all plunged lately too.

Part of the problem is a bubble mentality. Short-term investors are all trying to get rich quick with these cryptocurrencies as well as initial coin offerings or ICOs. Those are securities backed by crypto assets.

But they are incredibly risky. And the Securities and Exchange Commission is starting to crack down on ICOs that don't pass regulatory muster.

Just last week, the SEC fined two companies $250,000 each for failing to follow the proper laws for registering securities. One of the firms, Paragon, is working to legalize cannabis -- proving that it's possible to combine two investing manias in one company.

"The SEC reminded the crypto world that it has the final say over anything that smells like a security," said Naeem Aslam, chief market analyst with Think Markets UK. "The fear is that the SEC may not stop here and might take similar action against several companies that adopted a similar path.

Regulatory issues may be just the tip of the iceberg as well. Anthony Pompliano, a partner with crypto investing firm Morgan Creek Digital, wrote in a recent blog post that some crypto hedge funds may be forced to shut down due to the dramatic drop in prices.

He argued that many firms won't be able to raise more capital and won't be able to survive.

"The current bear market is going to go from bad to worse very quickly for both crypto funds and ICO projects. The pain ahead is something that many of these entrepreneurs and fund managers have never had to deal with," Pompliano wrote.

But he sees light at the end of the tunnel. Pompliano believes that the current shakeout is necessary. It will rid the market of the weak hands and leave only true crypto believers -- as opposed to traders -- left to prosper from the continued overall growth in the crypto world.

"Things will get much worse before they get better. That is okay. Remember, bear markets get rid of the tourists so that the true entrepreneurs can focus on building sustainable value," Pompliano wrote.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 86722

Reported Deaths: 1994
CountyConfirmedDeaths
Hennepin25264915
Ramsey10267314
Dakota6942124
Anoka5531131
Stearns362923
Washington345955
Scott232532
Olmsted223726
Nobles191416
Blue Earth15406
Wright14777
Carver13037
Rice12798
Mower12534
St. Louis123329
Clay119940
Sherburne105013
Kandiyohi9082
Winona72718
Lyon6244
Steele5062
Freeborn4903
Nicollet48716
Watonwan4844
Benton4793
Todd4722
Le Sueur4403
McLeod4332
Chisago4151
Waseca4118
Crow Wing40218
Otter Tail3674
Beltrami3624
Goodhue3179
Martin2809
Polk2574
Itasca25513
Becker2352
Carlton2261
Isanti2210
Douglas2191
Cottonwood2130
Pipestone2059
Pine1980
Morrison1841
Chippewa1821
Dodge1820
Sibley1663
Wabasha1640
Brown1582
Unassigned15752
Meeker1552
Murray1492
Yellow Medicine1421
Rock1390
Mille Lacs1333
Faribault1290
Cass1203
Jackson1201
Renville1176
Pennington1071
Houston1050
Roseau1050
Swift991
Fillmore980
Koochiching983
Kanabec958
Lincoln930
Redwood910
Stevens911
Pope810
Aitkin691
Hubbard650
Big Stone640
Wadena610
Grant574
Wilkin553
Norman510
Lake480
Marshall481
Mahnomen441
Red Lake370
Lac qui Parle360
Traverse290
Clearwater240
Lake of the Woods201
Kittson130
Cook60

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 76924

Reported Deaths: 1241
CountyConfirmedDeaths
Polk14988255
Johnson490727
Woodbury475459
Black Hawk425184
Linn3640102
Story321417
Dallas263238
Scott261427
Dubuque251840
Buena Vista191812
Pottawattamie189437
Marshall175234
Sioux12243
Wapello122057
Webster117914
Muscatine105152
Clinton102418
Cerro Gordo97721
Plymouth97520
Crawford9444
Warren9186
Jasper72032
Des Moines7137
Marion6874
Tama67830
Carroll6085
Lee5727
Wright5491
Henry5104
Dickinson4666
Bremer4497
Boone4346
Washington41411
Louisa41314
Franklin33017
Hamilton3123
Mahaska30919
Delaware3053
Jackson2803
Floyd2793
Winneshiek2745
Clay2663
Hardin2661
Benton2611
Clarke2533
Butler2512
Winnebago24711
Emmet24210
Shelby2381
Allamakee2355
Jones2313
Poweshiek2308
Clayton2243
Lyon2233
Buchanan2181
Cedar2101
Guthrie2095
Chickasaw1970
Kossuth1950
Grundy1932
Madison1922
Howard1764
Sac1760
Fayette1751
Iowa1741
Cherokee1732
Mitchell1720
Hancock1702
Humboldt1682
Harrison1642
Calhoun1612
Mills1541
Pocahontas1492
Palo Alto1480
Monroe1409
Page1400
Jefferson1291
Lucas1296
Cass1262
Monona1251
Taylor1171
Appanoose1163
Osceola1130
Union1123
Davis1104
Van Buren1081
Worth990
Keokuk841
Montgomery845
Greene790
Ida770
Wayne762
Fremont730
Adair591
Decatur580
Audubon501
Ringgold402
Adams270
Unassigned160
Rochester
Clear
61° wxIcon
Hi: 62° Lo: 44°
Feels Like: 61°
Mason City
Clear
65° wxIcon
Hi: 65° Lo: 45°
Feels Like: 65°
Albert Lea
Clear
63° wxIcon
Hi: 64° Lo: 45°
Feels Like: 63°
Austin
Clear
63° wxIcon
Hi: 63° Lo: 45°
Feels Like: 63°
Charles City
Scattered Clouds
64° wxIcon
Hi: 65° Lo: 45°
Feels Like: 64°
Cooler to wrap up the work week
KIMT Radar
KIMT Eye in the sky

Community Events