This chart of Bitcoin is a classic example of a bubble that has popped. It’s over. It’s not ever going back to near 20,000. Instead, sooner or later, Bitcoin price will approach zero. Yes, it will.
Not only was the cryptocurrency sector filled with visionary bubbleheads saying “This time is different,” (Pro tip: No, it wasn’t), scamsters and criminals moved in. Initial Coin Offerings had money just vanish. Oh gosh, we’re sorry millions got stolen. And since y’all wanted to be far away from the damn gummint interfering, there is no regulation or oversight. So, the money is gone. Cryptocurrency exchanges were raided too. For example, Mt. Gox said, oh, $450 million got stolen, and shut down. I’m going to put on my tinfoil conspiracy hat now and opine that some of these thefts were inside jobs.
Also, cryptos are widely used for money laundering and tax evasion. Astonishingly, they thought their schemes were bulletproof and the money could be hidden. They were wrong. Does any rational person think governments will allow that kind of thing? Or that bad code written by amateurs will somehow be immune to governments who have huge resources? Of course it’s not.
I don’t think there has ever been an entire sector that skyrocketed as much and collapsed as quickly as the cryptocurrency space. The skyrocketing phase culminated at the turn of the year. Then the collapse phase set in, with different cryptos choosing different points in time.
It doesn’t help that regulators around the world have caught on to these schemes called initial coin offerings (ICOs), where anyone, even the government of Venezuela, can try to sell homemade digital tokens to the gullible and take their “fiat” money from them and run away with it. There are now 1,596 cryptocurrencies and tokens out there, up from a handful a few years ago. And the gullible are getting cleaned out.
And it doesn’t help that the ways to promote these schemes are being closed off, one after the other.
The overall cryptocurrency space, in terms of market capitalization, peaked on January 4, when market cap reached $707 billion, according to CoinMarketCap. Less than three months later, market cap has now plunged by 65% to $245 billion. $462 billion went up in smoke.