Bitcoin briefly drops below $6000; over $550 billion wiped off cryptocurrency market in...

By midian182 · 75 replies
Feb 6, 2018
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  1. The cryptocurrency craze has cooled over the last few days as the price of all major digital currencies tumble. Earlier this morning, bitcoin fell below $6000 for the first time since mid-November, though it has rallied slightly since then. Overall, around $550 billion of value has been wiped off the entire market in just under one month, according to CNBC.

    At the time of writing, bitcoin’s price is at $6546, which is far from the $17,135 valuation it hit last month. The popular currency is still way up compared to one year ago, of course, but it is down more than 50 percent from the start of 2018. Both ethereum and ripple prices have also fallen more than 50 percent over the last few weeks.

    According to Coinmarketcap.com, the value of the entire cryptocurrency market hit an all-time high on January 7 when it reached $835.69 billion. Earlier today that number was at $278.53 billion, representing a drop of more than $557.1 billion.

    There a several reasons behind bitcoin's recent price woes. The head of the Bank for International Settlements, Agustín Carstens, said it had become a combination of “a bubble, a Ponzi scheme and an environmental disaster” that threatened to undermine public trust in central banks.

    “If authorities do not act pre-emptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability,” he said.

    Carstens added that cryptocurrencies were unsafe and just “pretending” to be currencies.

    Reports that the People’s bank of China will use the country's Great Firewall to block platforms related to cryptotrading and the issuing of ICOs haven’t helped assure investors, neither has India’s Finance Minister stating that the country wants to “eliminate” digital currencies.

    Additionally, major banks including Bank of America, J.P. Morgan, Citigroup, Capital One, Discover, and Britain’s biggest bank—Lloyds—have or are planning to block customers from using credit cards to buy cryptocurrencies like bitcoin. Some of the financial institutions are worried they could be left in debt should cryptocurrency prices continue to fall.

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    Last edited by a moderator: Feb 6, 2018
  2. BSim500

    BSim500 TS Evangelist Posts: 463   +806

    All that's happening is we're transitioning from "Mania Phase" to "Blowoff Phase" of this chart (link) as sanity is slowly being restored. As pretty as Dutch tulips are when planted in the garden, the actual bulbs themselves obviously never were worth +$17,000 outside of circular-logic based "valuations"...
     
  3. Squid Surprise

    Squid Surprise TS Evangelist Posts: 1,883   +910

    Crypto-currencies are here to stay... their value will continue to fluctuate, as they are still "new" to many people... Once they become mainstream (and they will), their value will be far more stable, and will fluctuate in value fairly similarly to any other currency.

    What we DON'T know yet is what that stable value will be... for instance, currency traders now have a baseline that they know each foreign currency is worth - like 10 USD should equal about 13-14 CAD - and if a currency goes a substantial value higher , they start to sell it off.... if it goes substantially lower, they buy it...

    Trading in cryptocurrency, therefore, is still a guessing game, as we don't really have a baseline for how much a Bitcoin (or Ethereum, etc) "should" be worth. If you think that number is 1 Bitcoin = 10,000 USD, then you should be buying it up now... but if it ends of being 1,000 USD per Bitcoin, you'll look pretty dumb...
     
    SirChocula and DaveBG like this.
  4. Uncle Al

    Uncle Al TS Evangelist Posts: 4,112   +2,604

    Crypto-currencies are on the same level as "junk bonds". They are great as long as the market will tolerate the risk, otherwise you risk taking a bath. Not unlike today's dollar, they have nothing backing them so their "value" is highly speculative. If you can afford the gamble you can make a ton of money .... and loose it all the next week if you are not a savvy trader that knows when to get out.
     
    David from LA likes this.
  5. Cycloid Torus

    Cycloid Torus Stone age computing. Posts: 3,495   +917

    @Squid Surprise
    Why would crypto become 'mainstream'? Backed by nothing. I know no government which accepts in payment of taxes. Some folks may accept for goods and services, but I think it is more to speculate than to function commercially.
     
  6. David from LA

    David from LA TS Rookie

    I see 2 reasons: 1. tether artificial prop. Their auditors dropped them a couple weeks ago; and 2. regulatory bans.

    I think the downward momentum is fairly strong now, my target price in 1 month is $2k.
     
  7. Squid Surprise

    Squid Surprise TS Evangelist Posts: 1,883   +910

    It's backed by exactly the same thing every other currency is backed by... BELIEF...

    An American Dollar is only worth what everyone in the world BELIEVES it is worth. It hasn't been tied to the gold standard for decades.

    Right now, since cryptocurrencies are fairly new, people's belief in them fluctuates drastically - hence the sharp increases and decreases in value over the past several months.

    But the trend seems overwhelming that they are here to stay - it might not be Bitcoin or Etherium, but some sort of cryptocurrency will survive.... in about 15-20 years (if not sooner) people won't think much differently about them as they do a US Dollar, Euro or Yen...
     
  8. David from LA

    David from LA TS Rookie

    You are actually completely off. The USD is backed by the central bank and not by belief. Your concept of belief is the speculative part of USD futures trading. The currency's fundamentals are backed by the US government and its cash flow.

    The reason why crypto is fluctuating is not because it's new. It's fluctuating because it's a highly speculative instrument that is not regulated. The recent flux are either due to rumors, some kind of geopolitical factor (regulatory bans), and/or fraud (tether and exchange frauds). There is a huge amount of insider trading and the market movers will front end big market moves. The fact that it's not regulated gives the coins their uniqueness and value but also will be its downfall.

    I know this is a tech forum but the lack of knowledge of the average joe is essentially why there is a big crypto market right now. People who don't know anything about it sell their belongings to trade it. Very scary stuff.
     
  9. David from LA

    David from LA TS Rookie

    Honestly, Techspot needs to write a little better finance articles... very surprised tether isn't even mentioned in this article, but probably accounts for at least 50% of the reason of the drop. Come on guys.

    Would be happy to bounce off ideas if you guys need an outside consultant. I am an economist by trade.
     
    SirChocula likes this.
  10. Squid Surprise

    Squid Surprise TS Evangelist Posts: 1,883   +910

    Lol... I wish YOU understood what you just typed...

    Please do some research... I'll start you off:
    https://www.quora.com/If-the-U-S-do...-what-is-it-backed-by-Where-is-the-true-value
    https://www.forbes.com/sites/pascalemmanuelgobry/2013/01/08/all-money-is-fiat-money/#43dea793dd5d

    ALL currencies are backed by one thing... and one thing only... BELIEF...

    Edit: After reading your second post, I'd STRONGLY suggest doing a LOT more research... if you really are an economist, you really should know what a currency is!
     
  11. David from LA

    David from LA TS Rookie


    You should pick up a basic fundamentals of finance book rather than googling forums. Let me give you a free lesson on how currencies are priced:

    Unless they are begged to USD, which HK and a few other countries do, they are floating rates which are affected by supply and demand. Major factors affecting daily flux include unemployment rates, inflation detlas, and GDP. There are a few exception, such as China, who artificially fixes its currency to obtain an export advantage.

    Ok with that said, whether you believe the currency will go up or down will not affect the spot price whatsoever. The spot price is 100% determined by numbers. Your concept of belief is essentially speculation of what the numbers will be in the future. But that's not what you meant, you meant belief is the fundamentals that give a currency value, which everyone and their mom with some knowledge in finance will disagree with you.

    It's unfortunate that the average joe, like yourself, googles quora.com and sees something, thinks he/she understands everything about it, then trades his/her life savings on it. This is what causes a financial bubble. I would encourage you to understand fundamental analysis (a financial concept in valuation) before anything else. Blindly believing is 1 thing, but spreading false concepts that affect other people's judgement is another, which is simply irresponsible.
     
    cliffordcooley likes this.
  12. captaincranky

    captaincranky TechSpot Addict Posts: 13,724   +3,143

    Cryptocurrency is naught but a chain letter. The only value it accrues, is from the real money the fool before you pumped into it.

    If I were to hazard a whimsical guess as to who created "Bitcoin", it would be Bernie Madoff.
     
  13. Squid Surprise

    Squid Surprise TS Evangelist Posts: 1,883   +910

    I now see the flaw... you are talking about the fluctuation of currency... I'm talking ABOUT CURRENCY.

    A currency is simply a medium one uses to exchange for goods and services. How much this currency is worth depends upon how much people believe it is worth. This belief is solidified into a "decree" by various agencies - such as the stock market, central bank, etc... but the fact remains that if, for some reason, everyone believed that the US Dollar was worthless, it WOULD BECOME WORTHLESS!!

    This works just as simply in an elementary classroom - let's say Grade 3. Let's say that a bunch of students decide that marbles are desirable. They are worthless to the "real world" (I can buy 100 for less than a dollar), but these 8 year olds REALLY want them. They are willing to trade various real items (snacks, lunch money, toys) for these marbles. Some will even agree to do other students' homework in exchange for 1 or 2 marbles....

    This makes marbles a currency. They are backed by NOTHING. Only these 8-year-olds' belief that they are worth something. As long as these children continue to BELIEVE that the marbles are valuable, they ARE valuable. You could come to this classroom with a few marbles and own half their belongings....

    The flaw to the belief system, of course, is what happens when these children realize that their lunch money is actually worth a lot more than a couple of marbles? Well, marble prices plummet....

    This happens all the time: One child gets his parents to buy him a few hundred marbles... Then another child does.... soon almost every child has more marbles than they could ever play with... they no longer want any more... They no longer BELIEVE that marbles are worth very much...

    Kind of similar to Germany during the 1920s....

    Of course, being children, a new currnecy will soon arise... perhaps Pokemon cards...
     
    senketsu likes this.
  14. captaincranky

    captaincranky TechSpot Addict Posts: 13,724   +3,143

    That's all well and good, but at least they're a tangible item that the children can still play with, even if they were overcharged for them.

    You can't even flip a Bitcoin, to see whose turn it is to kick or receive
     
  15. Cycloid Torus

    Cycloid Torus Stone age computing. Posts: 3,495   +917

    At this point someone will point out what is written on the USD bills themselves - "This note is legal tender for all debts, public and private." which means use of the US currency has the force of law in support.

    Now I agree that 65 years ago, you could buy a comic book for a dime and it costs much more than that today (something about inflation and the borrowing done by our dear old government). Since the Federal Reserve wants a bit of inflation (if only to make it cheaper to repay loans) to 'support' the economy, this is the way it is.

    However, crypto-currencies, whether pegged to the dollar or to the price of tulip bulbs or the air we breathe (Moon Is A Harsh Mistress), still fail to have the necessary legal support and, more to the point, the power to TAX. TAXATION puts the entire wealth of the nation at the disposal of the government to diddle with the USD (and some think they do just that). There is no such support for the cryptos.
     
  16. Codestaxx

    Codestaxx TS Rookie

    1. Banks are scared their ponzis are vulnerable
    2. Crypto is a threat to government fiat and evil banksters
    3. If anyone mention's tulips you know they don't do their own research and parrot what they hear
    4. Block chain crypto is more disruptive than the internet
     
    ypsylon and SirChocula like this.
  17. Codestaxx

    Codestaxx TS Rookie

    Thus crypto is more valuable
     
  18. Codestaxx

    Codestaxx TS Rookie

    Can you flip that number direct deposited to your account? Nope.
     
  19. Cycloid Torus

    Cycloid Torus Stone age computing. Posts: 3,495   +917

    Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay is well worth reading. Also recommended, Where Are the Customers' Yachts by Fred Schwed, Jr.
     
  20. captaincranky

    captaincranky TechSpot Addict Posts: 13,724   +3,143

    No silly, but you can certainly walk into a bank and withdraw it in quarters.
     
  21. QuantumPhysics

    QuantumPhysics TS Addict Posts: 198   +118

    The ride was fun while it lasted.

    Cryptocurrency brought a lot of people into the crypto market and stock/commodities market who otherwise ignored investing through the internet.
     
  22. COMANCHE1232

    COMANCHE1232 TS Rookie

    what will be 2k, bitcoin?

    please say bitcoin so I can laugh
     
  23. SirChocula

    SirChocula TS Maniac Posts: 174   +182

    Shows how behind the time you truly are. Its value comes from the decentralization and privacy that it can provide. People who don't want to participate in central banking (and how it's destroying the world) are one of the reasons crypto exist. It's something that is here to stay entirely...a new shift in economics and monetary transaction.
     
  24. SirChocula

    SirChocula TS Maniac Posts: 174   +182

    Exactly. It saddens me that a ton of "tech" readers on here don't know wtf they are even talking about in the slightest. It's truly pathetic imo.
     
  25. Cycloid Torus

    Cycloid Torus Stone age computing. Posts: 3,495   +917

    That is a distinct value for the crypto-currencies - but it will be most attractive to the wrong folks (extra-legal is often illegal) - and this will limit the value of the technology for most of us.
     

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