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 6:35 PM
Updated: Nov 20, 2018 6:35 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.

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Confirmed Cases: 34574

Reported Deaths: 2134
CountyConfirmedDeaths
Marion9853578
Lake3616190
Allen161869
Cass15877
Elkhart132228
St. Joseph127434
Hendricks116971
Hamilton115993
Johnson1105108
Madison58659
Porter53928
Bartholomew51135
Clark50441
LaPorte43323
Howard40828
Tippecanoe4023
Jackson3891
Delaware38537
Shelby37322
Hancock33827
Floyd31839
Boone31535
Morgan27724
Vanderburgh2742
Montgomery24117
White2358
Noble23221
Clinton2321
Decatur22431
Grant21122
Dubois1993
Harrison19422
Henry18211
Greene16924
Vigo1698
Dearborn16821
Monroe16612
Warrick16628
Lawrence16324
Miami1401
Putnam1377
Kosciusko1351
Jennings1304
Orange12822
Scott1203
Franklin1108
Ripley1096
Marshall1082
Carroll932
Daviess8816
Steuben832
Wayne825
LaGrange812
Wabash782
Newton7810
Fayette777
Jasper671
Washington521
Jay520
Clay511
Fulton491
Rush472
Randolph473
Pulaski460
Jefferson451
Whitley423
Starke393
DeKalb371
Sullivan361
Owen351
Brown331
Perry330
Wells320
Benton300
Huntington282
Knox280
Tipton251
Blackford252
Crawford240
Fountain212
Switzerland200
Spencer201
Parke180
Gibson172
Posey160
Adams151
Ohio130
Warren121
Martin110
Vermillion100
Union90
Pike60
Unassigned0167

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Confirmed Cases: 120260

Reported Deaths: 5390
CountyConfirmedDeaths
Cook779253642
Lake8331291
DuPage7707373
Kane6338178
Will5566276
Winnebago225155
McHenry156672
St. Clair113782
Kankakee91045
Kendall79819
Rock Island65824
Champaign6407
Madison58060
Boone45217
DeKalb4164
Sangamon35129
Jackson28610
Randolph2704
Peoria2339
McLean22013
Ogle2063
Stephenson2062
Macon19319
Clinton18617
Union15411
LaSalle15313
Whiteside14013
Iroquois1324
Coles12715
Out of IL1181
Warren1170
Jefferson10116
Knox1000
Grundy982
Monroe9512
McDonough8811
Unassigned850
Lee811
Cass730
Tazewell735
Henry690
Williamson672
Pulaski560
Marion500
Jasper457
Macoupin452
Adams441
Perry410
Vermilion401
Montgomery391
Morgan361
Christian354
Livingston342
Jo Daviess320
Douglas280
Jersey241
Fayette213
Ford201
Menard200
Woodford192
Mason180
Washington180
Hancock170
Mercer170
Shelby161
Bureau151
Carroll152
Schuyler130
Bond121
Franklin120
Clark110
Crawford110
Fulton110
Moultrie110
Piatt110
Brown100
Cumberland100
Logan100
Wayne91
Alexander80
Henderson80
Johnson80
Effingham71
Massac70
Saline70
Greene50
Marshall50
De Witt40
Lawrence40
Richland30
Stark30
Clay20
Edwards20
Gallatin20
Hamilton20
Wabash20
White20
Calhoun10
Edgar10
Hardin10
Pike10
Pope10
Putnam10
Terre Haute
Broken Clouds
76° wxIcon
Hi: 78° Lo: 62°
Feels Like: 76°
Robinson
Scattered Clouds
79° wxIcon
Hi: 77° Lo: 61°
Feels Like: 79°
Indianapolis
Broken Clouds
73° wxIcon
Hi: 74° Lo: 62°
Feels Like: 73°
Rockville
Scattered Clouds
67° wxIcon
Hi: 75° Lo: 62°
Feels Like: 67°
Casey
Clear
76° wxIcon
Hi: 76° Lo: 62°
Feels Like: 76°
Brazil
Broken Clouds
76° wxIcon
Hi: 76° Lo: 61°
Feels Like: 76°
Marshall
Broken Clouds
76° wxIcon
Hi: 77° Lo: 62°
Feels Like: 76°
A warm up on the way.
WTHI Planner
WTHI Temps
WTHI Radar

WTHI Events